If the payout rate of the machines could be set to pay out 100% of the take in prize money, the military would not be taking a profit, but the gambling would still be real.
That would mean giving away lots of prizes and you would have an addicted military very, very quickly. For most people, the losses are what stop them in their tracks
Why not 105%? Keeps people of of trouble. I bet the military would rather you sat a Skinner Box than broke your leg surfing or leaked military secrets on TikTok.