Tennis was dropped after the 1924 Olympics mainly because the adminstrators could not agree on the issue of defining what an amateur was and what a professional was. Back in those days on amateurs were allowed to participate in the Olympics. Tennis returned as a medal sport in the Olympics at the 1988 Games in Seoul.
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There are a number of reasons but the primary one is the refusal of Major League Baseball to suspend its season so major league players can compete in the Olympics. Other reasons are the way Baseball polices and policed drugs in the sport as well as relatively little interest and competition in it.
Their reasoning was that softball was a world-wide sport yet. The United States was dominating all the other teams they played against. This is really ironic because the United States did not win the last Olympic games.
Softball has been removed from future Olympic competitions because of the United States' dominance in the sport. Before the Japanese gold medal win in 2008, the United States had won gold at every other Olympic game (1996, 2000, 2004). It is possible that softball will be reinstated sometime in the future (though not before 2016) as it is gaining in popularity worldwide, most notably Australia, Japan, and China.
Because they said softball and baseball were "too American" to be in the Olympics and that since USA was domintaing in softball then other countries should have time off to "catch up".