But the odds of the player managing to do so are proportionate. In theory, if 8 players each decide to go for three rounds, one of them will win, but the losings from the other 7 will pay for that player’s winnings.

You’re right that the house is performing a Martingale strategy. That’s a good insight. That may actually be the source of the house advantage. The scenario is ideal for a Martingale strategy to work.