The last sucker loses 100%.

The site's operator's profit is 1% ... where did you get the 80% figure?

sorry, was mistaken there.

the profit is actually the first 1.0 + 1% of all wagers beginning with n=2.

here's an n=4 example. in this example, there is about an 80% payout, with the operator getting a 20% profit.

player A bets 1.0

player B bets 1.2, and 1.188 goes to player A.

player C bets 1.44, and 1.4256 goes to player B.

player D bets 1.728 and 1.71072 goes to player C

player D is the sucker and gets nothing.

total taken in = 5.368, total paid out 4.32432, total profit to operator 1.04368