What is sportsbook

I would say it's in preparation for the sportsbook betfair are setting up.

I wonder how they'll be doing this.

They're going to have the same problem as all the books with wanting to restrict winners, and perhaps the added problem that arbers and people managing liabilities are likely to be losers on here, so the grounds will be less clear for refusing people. Add to that the idea that a significant part of their USP is that 'winners are welcome' and it's hard to see how they can offer much of a sportsbook at all--maybe just something for mature markets with prices that are worse than the main exchange.

Can Betfair produce a website which is as slick and easy to use as b365 for example, given how slow and awkward the exchange one is.
Plus you can't watch Sky for more than 10 minutes without seeing an advert for a bookie which will be hard to compete with.