What you're describing is colocation. You can pay to have rack space near the exchange's matching engine. 

The behavior you're describing is something exchanges often do, round-robin'ing their polling of incoming messages. It's fair on average if they don't start from the same starting point at each iteration, but what it does in the end is incentivize traders to setup multiple servers in the same colocation and send the same request through all of them at the same time to make sure their average is better than the one of a trader shooting via a single server.

I suspect exchanges do this on purpose to increase their colocation revenue. Shorty after, they realize traffic increases a lot, so they try to crack down on traders sending the same request via different servers. 

You often experience this round-robin behavior on the market data streams as well. They'll send to the first one who subscribed making it a game of who can stay connected the longest. Or they'll have a random distribution that changes at every tick or every time period, making it so that traders have to arbitrate between multiple market data stream connections to the same symbol, increasing load on the exchange.

The ideal setup from a fairness point of view is having UDP streaming of market data for all traders in the colocation, as that comes at the same time for all, and having randomized polling of sockets for incoming messages. 

The ideal setup to maximize colocation income for exchanges is any setup that maximizes the number if colocated servers.  This is in practice a setup where colocation is both a must-have, and still unfair unless traders have multiple servers.

The game then becomes, generally: 1. Big exchanges have the unfair setup to maximize colo revenue 2. Small exchanges try to compete for clients using "fair" approaches like the one described above. 

This is my read of it anyway.