Oo, I can do this! I'm not a historian, but I come from 4 generations of ranchers, and we started ranching in the mid-1800s, when the Bison wasn't totally gone. So I can give you some history about the attempts to use Bison and cow/Bison crossbreds (the "Beefalo").

The very short answer is that Bison are problematic domesticated animals. They're (by and large) ornery. And they're tall enough that you (as a rancher) need to have specialized fencing, corrals, trailers--every aspect of your physical plant needs to be specialized JUST for Bison. So, before you (as a rancher) incur the SUBSTANTIAL costs associated changing every aspect of your physical plant, you'll need to be convinced the monetary upside is there. And it simply never has been. By virtue of being more ill-tempered then, say, Herefords (a very common breed in the 19th and 20th Century American West), Bison will tear up your physical plant more, and will be more dangerous for you to work with. Bear in mind, on many occasions, you'll need to work with your herd on foot, and up close and personal. So you want the gentlest, nicest stock you can get. And Bison ain't it.

There's another problem most people don't have any idea about. Cows need to eat 1.5% of their weight in dry matter every day. (In some cases, like when they're pregnant or nursing or when it's really cold, that number goes up.) So in the American West, where forage is a bit hard to come by, you want stock whose carcass to meat ratio is really slim--the most beef for your total weight, if you will. Herefords will give you a carcass ratio of 66%, meaning that 66% of the total carcass weight is useful, saleable beef, rather than bone, sinew, organs, etc. The best data I could find is that Bison have a 57% carcass ratio. So you're feeding 9% more feed to get to the same amount of saleable beef. Most ranches run very close to their 100% sustainable load (and, for reasons I won't get into here, that's a desirable approach), so what that means is decreasing your total sales by basically 10%. And for most ranches for most years, that by itself will entirely consume your profitability---over 100+ years of ranching, my family's data suggests an average annual return of 3%.

Finally, a version of the physical plant issue comes up. You can hire cowboys who know how to work with cattle. Ditto vets, and slaughterhouses. But once you start raising Bison, you need to find people who know how to work with them (there aren't many), vets who know their particular health problems (there aren't many), and slaughterhouses who will process them (there aren't many). And you'll pay a premium each and every time. It's just not worth it.

Final note: there was an attempt in the mid-1900s to breed a hybrid cow/bison product call the Beefalo. That failed, as far as I've ever heard, because the products managed, largely, to successfully combine the worst traits of both breeds. I.e., what you got was a large, ornery, thin animal (the bison traits) with susceptibility to heat, dust, and insects (the cow traits); what you wanted was a smaller, well-natured, fat animal (the cow traits) with resistance to heat, dust, and insects (the bison traits). And people just never found a way to get that combination of genetic traits to express.

I've tried to cite SOME sources for this stuff. A lot of this, to be frank, is just me sitting at the dining room table with my father and grandfather (collectively, about 100 years of ranching experience) and listening to them talk about things like why we never raised bison. Both were very active in the NCA (National Cattlemen's Association), which was very involved with both the early bison ranching experiments in the West, and the attempts to crossbreed Beefalo, and some of our neighbors were involved in one or the other of these attempts, so we had a great deal of personal experience. I know the problems (especially in this sub!) of citing yourself as a source, but.....I've been involved in this stuff for 30 years. And OP's questions are pretty well known to ranchers who have taken time to educate themselves about bison.

/u/CoventinaClose makes excellent points. I would like to add onto it from another perspective.

I wrote an answer some time ago regarding the U.S. Army policy toward the extermination of buffalo herds in order to subdue the Indian tribes who relied on them for sustenance. Because of this policy, the U.S. had incentive to work toward killing the buffalo herds rather than domesticating them, a much quicker process.

These sentiments, along with the idea that domesticated animals represented a civilized society as pointed out by /u/CoventinaClose, are echoed in the words of Colonel Nelson A. Miles, an officer under the command of General Sheridan during the time of this policy. He says:

This might seem like cruelty and wasteful extravagance but the buffalo, like the Indian, stood in the way of civilization and in the path of progress, and the decree had gone forth that they must both give way. . . . The same territory which a quarter of a century ago was supporting those vast herds of wild game, is now covered with domestic animals which afford the food supply for hundreds of millions of people in civilized countries. ^[1]

While it might make sense to attempt to domesticate the buffalo herds, they essentially become a symbol of resistance and representative of a lifestyle that for the most part was rejected by American society. By preserving the buffalo, they would metaphorically be preserving the spirit of the Indians - the very thing they wanted to crush, to tame, and to assimilate.

Besides this, it is important to note the economic drive that was also involved with the hunting of the buffalo. As many of us were probably taught in school, traders, trappers, and hunters played a big role in the extermination of the buffalo. While my comment that I linked makes the argument about how the effect of these people were propelled by the military, which they were, there was always money to be made in the fur business.

In the book Fur, Fortune, and Empire: The Epic History of the Fur Trade in America by Eric Jay Dolin, there is an entire chapter dedicated to discussing the impacts of the buffalo fur trade. Even before the U.S. really started expanding into areas like the Great Plains, such as in the mid-1830s, thousands of buffalo hides were being shipped down the Missouri River and over the Santa Fe Trail. Statements by artists, merchants, and naturalists were made about the massive quantities of buffalo being hunted and that even then, the threat of extinction was seen as a possibility. ^[2]

Since the buffalo was creating such a profitable market, many did not see the need to switch industries and start domesticating them when they already had animals that had been domesticated for a lot longer.

My first cited article makes reference to my next citation, which I looked up to find more context. General Henry H. Sibley noted the following on the sport of buffalo hunting:

From the Missouri region, the number of robes received, varies from 40,000 to 100,000 per annum, so that from a quarter to half a million of buffalo are destroyed in the period of each twelve months. So enormous a drain must soon result in the extermination of the whole race; and it may be asserted, with much certainty, that in twenty years from this time, the buffalo, if existing at all, will be only found in the wildest recesses of the Rocky Mountains. ^[3]

This identifies just how large the buffalo fur trade had become in the named region - large enough to warrant the thought that extermination would be upon the whole species. However, General Sibley begins ringing a very familiar bell:

The savage bands of the "West [sic], whose progenitors have, from time immemorial, depended mainly upon the buffalo, must, with them, disappear from the earth, unless they resort to other means of subsistence, under the fostering care of the General Government. ^[3]

In the end, it is evident that the ideology of the nation regarding economics and the treatment of the perceived "savages" definitely played a role in how the American society saw the buffalo and how they ultimately treated it.

References

[1] - The Frontier Army and the Destruction of the Buffalo: 1865-1883 by David D. Smits

[2] - Fur, Fortune, and Empire: The Epic History of the Fur Trade in America by Eric Jay Dolin

[3] - Sport of Buffalo-hunting on the Open Plains of Pembina - By HON. H. H. SIBLEY, M. C.