Why not having the payout made in percentage. A fixed percentage of the whole pot and depending on the ammount of participiants the pot is either high filled or not so high filled.
But first and second place do always get more out of it than they actually payed in. So its a temptation for all to give their best to begin with.
As more player participate as higher is the winning. AND the 3rd wont lose anything when there are more than 4 people taking part. If only 4 taking part then the 3rd will always just lose 20 percent of the payment he made.
example.
no matter how many participiants. but at least 4.
1st. 60%
2nd. 40%
3rd. 20%
4th. 0
Players do know what they "invest". As better they are as more they can "earn".