Difficult to say why he made that comment; moat logical explanation is that he was just complimenting the local crowd in Indiana which had become very active in basketball.
Another hypothesis with no proof whatsoever. When Phog Allen told Naismith he was leaving to coach basketball at Baker University Naismith told him: "You can't coach basketball; you just play it." Of course Allen went on to become a great coach and is considered the Father of Basketball Coaching. Naismith stopped coaching in 1907 and afterwards he was more involved in academics than sports and he long regarded basketball as a curiosity and preferred gymnastics and wrestling as better forms of physical activity. Looks like there might have been a philosophical difference between them on the approach to the game.
At the time of the alleged quote, 1936, Allen had been not only coaching at KU since 1919 but was also the Athletic Director until 1937 but continued coaching until 1956. Allen went on to become the best know coach of his time and was key in the formation of the National Association of Basketball Coaches which went on to create the NCAA tournament while Naismith played a role in the formation of the less prestigious National Association of Intercollegiate Basketball, which later became the National Association of Intercollegiate Athletics (NAIA).
Again, no proof, but it could have been a veiled stab at Allen which was at the time head of the basketball program at Kansas and ground zero for college basketball.