To be fair, they had a team at Starfleet HQ working on granting Moriarty independence from the holodeck for four years and simply didn’t have the technology for it. They also didn’t know he was aware that whole time and thought he was basically asleep. Picard is also very reasonable and encouraging when it looks like he’s left the holodeck, and only starts on the prison box when it’s clear he’s willing to destroy the ship if they don’t get him off the holodeck.