I don't know what you define as outsider money, but the fact is that they are a market maker, and you are never going to make large amounts of money on arbitrage by itself.

Two business models:

Good returns - take other peoples money, trade it, take 20% of profits

Excellent returns - trade your own money, make a bit less overall but keep 100% of profits

If the first case, whats the incentive for users to trade with you

In the second case, why start a company?

Not sure what you mean

Prop shops usually come about as the partners buy out other investors in a fund