It's more like paying for the privilege of operating a monopoly on poker tables, with the guarantee that the rake will be kept low, so that the operator is not competing with other entities for the customers' rake. A market maker's competition to collect the spread is with other market makers, just like a casino's main competition to collect the customer's rake would be a different casino.
As long as the market maker is executing orders at the NBBO on their ATS, they shouldn't be in conflict with Reg NMS, even though they are the only operator with the ability to market make on their ATS. Paying for order flow allows market makers to avoid competition in capturing the spread at the NBBO, however small the spread may be, while also helping to guarantee liquidity to capture the spread on, by giving them the sole privilege to market make on those orders.
Returning to the earlier poker table analogy, I mentioned that the operator with a local monopoly on poker tables, would be required to keep their rake low to keep their local monopolistic privilege, as an analogy to how market makers also have to keep their spreads in line with the NBBO (due to Reg NMS), in order to keep their privilege of executing orders on an ATS.
It's slightly different. With poker, you play with drunks because they make mistakes. With order flow, you want trades from small fish who don't have any special knowledge so you market make and not be taken advantage of, yourself.
Except that unlike in casino, in stock market a Designated Market Maker can go against the crowd and "wait it out" any negative downfall.
Lets say customers bought GME and GME shoot up.
Citadel just waited out until the movement fizzled out.
They were able to hold naked short position for prolonged period of time (basically printing fake shares) to artificially increase the float
