In the Makefile there is a do-install-ENCRYPTION-on part but there is no such option ENCRYPTION. The dependencies for the encryption are in the Makefile as hard depends, so it is probably okay to just move the do-install-ENCRYPTION-on contents into do-install.
A commit references this bug: Author: amdmi3 Date: Fri Jun 9 15:09:07 UTC 2017 New revision: 443007 URL: https://svnweb.freebsd.org/changeset/ports/443007 Log: - Fix key file installation PR: 219887 Submitted by: nico@lifeisabug.com Changes: head/games/xonotic/Makefile