They can't really 'update' MTGO because it's SUCH a shit show. The core client/server structure is not only from 2002, but it was buggy even then. Basically it's a non-stop parade of patches and niggerrigging to get it to work. IIRC a while back someone who was a dev for WotC mentioned how hilariously spaghetti MTGO is — absolutely no one wants to work on it.
The only way to 'fix' it is to start from the ground up, and coding all the various possible interactions in such a massive card pool is a massive undertaking in of itself. Everything (mostly) works in MTGO, so it's good enough.
I really don't know why they didn't use Arena as a platform to rebuild MTGO. They pull in so much fucking money off people drafting and sealed and competitive players have the chance to grind out games with decks before events.
Because people can't use Arena to test real decks, and because they would face so much shit by simply shutting down MTGO, they've maneuvered themselves into a position where they're competing against themselves. Maybe they figure none of the competitive players will bother with Arena, I don't know.
As it stands, Arena's economy is horseshit and they're not going to have any player retention since by the time anyone gets one deck together, it'll rotate.