Squash is among the seven sports considered for new events in the 2016 Olympics. The other nominated sports are baseball, golf, karate, roller sports, rugby and softball. Of these, four were nominated for the London 2012 Olympics, but none were chosen. 
At the International Olympic Committee (IOC) session in Singapore 2005, squash won the vote to get into the Olympic program, but did not get the 2/3 majority needed for adoption. The new sports for 2016 are baseball and softball, with baseball having been in the Olympics before as a "test" sport, however it did not succeed and was only on the program for one event before it was removed.
Squash is among the favourites because it already in 2005 proved to be favourite for the IOC members at that time. Since 2005, according to the World Squash Federation (WSF), there has been a lot of work to get squash into the Olympic Games. A marked rise in players across the world has occurred, and approximately 13 new countries have been adopted into the WSF.
However, baseball is also considered among the favourites, because it has been tried before and because it is a major sport in the United States and growing in the rest of the world. Notably, Chicago is bidding to host the 2016 Olympics, and therefore a major US sport could be the natural choice. 
The last of the three favourites is golf, because it is by far the most played sport of the candidates. However, it is seen as a disadvantage that the Olympic tournament may not be the top priority for the players, who may feel they would rather concentrate on the US or European tours.

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Squash lines up for the 2016 Olympics