As ridiculous as all of this is, there's some poetry in a company called Robinhood taking angel investment from various billionaires and using it to give millions of dollars in (probably) free leverage to teenagers.
So, it's a cash flow of billionaires -> teenager margin account -> billionaires.
"He stole from the rich, and he gave... Well, he airdropped the money over a gated billionaire neighbourhood." doesn't make the most catchy song for a folk hero.
RobinHood is essentially lending unlimited money to the teenagers in question. Assume, as an oversimplification, half of them will win big, and half of them will lose it all.
For the wins, the teenagers will keep it all, and for the losses, RobinHood will have to pay for it, because the teenagers don't have the money and will declare bankruptcy if RobinHood tries to recover it. This is a net wealth transfer from RobinHood to the teenagers.
The net wealth transfer looks like this:
teenagers: +lots of money
traders on the other side of the transactions: approximately +0 (wins and losses cancel out)
RobinHood: -lots of money
You can play games with which money comes from where, but you can't deny the way the money is flowing on net.
Market makers have their place, and you wouldnt have the liquidity you'd like if they weren't there. Market makers face relatively low risk as they dont generally hold positions for long, but they can also face severe penalties if theyre supposed to be in the market, but are not. My first boss was fired over a potential $600K USD fine because he took us out of the Options market (as a market maker) for an hour (potential fine was $10K/minute) and refused to accept accountability for his actions.
Also, trades are typically matched on a first in, first out basis with price/time priority. Market makers respond to messages that are essentially a request for liquidity if an appropriate contra order is not sitting on the exchange's order book.
Who gets paid commissions depends on what type of entity is on the other side of the trade and what agreements are in place with the meriad of counterparties involved (e.g. if you want to buy 10K shares of a company, that could be broken into, say, 20 trades of various quantities and prices below a limit until the quantity is fulfilled).
If you only have a few hundred or thousand to start with, you can gloat about how you only really lost that much while theoretically owing millions, but you still gave up 100%.