The majority of IB's profits comes from market making, and they are VERY profitable. Is that because IB has lots of clients? Lots of dumb clients? Because they trade only at the ideal moments? Or for some other reason?
Options market makers (such as Timber Hill) make money by buying at the bid, selling at the ask and controlling risk.
Regulations that prevent independent traders from competing with them doesn't hurt their business either.
Last august when the volatility started IB made wide markets when other market makers completely withdrew from the market. When the other market makers are competing then they make less money. Listen to the conference calls on their website for further information.