I'll answer as a former frequent bot-user. (Now an occasional user)
Starting from the base, @grumpycat, that we are talking about your stake, that it is big but limited, and that you are free to use it as you wish.
If you flag people who use the bots you don't like, you force the bots to restrict their time limit, in order not to lose clients to the competition. Because, obviously, users will prefer "safer", complying bots to bid to. It has a bigger impact because, in time, fewer people will be using those non-complying bots, so one person you flag will have a big effect because the numbers of them will be smaller every time and so, the chance of getting a flag gets bigger. Less VP necessary, less brain-time, more impact.
If you reward users who prefer the bots you like, you invite the people to use those bots. But as more people will be using them, because of the invitation, the chances of winning will be getting smaller and smaller. You can't reward everyone! So, you would have to select and curate more every time. And, because the bots that don't adjust their time limit would not be affected, they will still be a majority, and people will still bid on them, along with the others. So, more VP needed, more brain-time, and the impact will be minimum.
Bonus points if able to explain Grumpy-compliance in simpler terms and why it's not always possible to influence vote sellers behavior by flagging them directly.
Grumpy-compliance is a term coined by @grumpycat to define bidbots that restrict the time of the posts they can be used to upvote to 3.5 days max.
If people use bidbots to upvote their own posts on the last minute (Or even the last of the seven days period), they restrict the time the rest of the community have to flag them if they see fit. So, it could be seen as if they get a big bunch of rewards from the pool in an unfair way, no matter the quality of their content.
Grumpy established that, if he flags the bots, the effect will be temporary because the bidbots are constantly getting money (And their owners, as a collective, have far more SP than Grumpycat to recover themselves). But if he flags bidders, the effect will be permanent, because people will prefer to use "safer" bidbots and the rest of the bidbots will be forced to comply because of the competition.
So, he decided to flag users with the best content using non-compliant bidbots, even if they use them within the 3.5 days limit, in order to get the best impact and exposure with the minimum VP and brain-time cost. Which has been controversial, for putting it mildly.
I don't like it a bit, BTW. I think it is unfair and it sucks. But I am forced to admit it is actually working.