That Betfair's market is a free market in that the prices are not controlled by the bookmaker.
Mr Caplan said Mr Rodgers disguised his bets by placing them through a number of accounts which were in the names of friends and relatives, including his girlfriend Joanne Richardson and a man called Darren Armitage, from Barnsley, South Yorkshire.
He said Betfair became suspicious of Mr Rodgers' activities in December 2002.
Mr Rodgers denies both charges against him
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Mr Caplan said: "On 30 December 2002 Legal Set was laid heavily. Legal Set was owned by Platinum Racing (a syndicate run by Mr Rodgers)."
He said Betfair began to monitor Ms Richardson's account - called joricho - and became convinced that 11 other accounts were also linked to Mr Rodgers.
Mr Caplan said: "There was technical evidence that bets were being placed on different accounts from the same computer."
Their suspicions were also raised by strange betting patterns, he said.
Mr Caplan said: "The accounts offered odds on lay bets that were significantly higher than elsewhere. This inferred a high degree of confidence in the lay bet.
"For example CD Europe had a starting price of 16-1 yet joricho laid it at 28-1 (ie 29.1). Levitator had an SP of 13-2 yet william4 (Darren Armitage) laid it at 11-1 (12.1)."
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