Wilhelm Justus Goebel was born January 4, 1856, in Albany Township, Bradford County, Pennsylvania, the son of Wilhelm and Augusta (Groenkle) Goebel, immigrants from Hanover, Germany. The first of four children, he was born two months premature and weighed less than three pounds. His father served as a private in Company B, 82nd Pennsylvania Infantry Regiment during the American Civil War, and Goebel's mother raised her children alone, teaching them much about their German heritage. Wilhelm spoke only German until the age of six, but embraced the culture of his birth country as well, adopting the English spelling of his name.

Three men sought the Democratic nomination for governor at the 1899 party convention in Louisville - Goebel, Wat Hardin, and William J. Stone. When Hardin appeared to be the front-runner for the nomination, Stone and Goebel agreed to work together against him. Stone's supporters would back whomever Goebel picked to preside over the convention. In exchange, half the delegates from Louisville, who were pledged to Goebel, would vote to nominate Stone for governor. Goebel would then drop out of the race, but would name many of the other officials on the ticket. As word of the plan spread, Hardin dropped out of the race, believing he would be beaten by the Stone-Goebel alliance.  Goebel took a calculated risk by breaking the agreement once his choice was installed as presiding officer. Hardin, seeing that Stone had been betrayed and hoping he might now be able to secure the nomination, re-entered the contest. Several chaotic ballots resulted in no clear majority for anyone, and Goebel's hand-picked chairman announced the man with the lowest vote total in the next canvass would be dropped. It turned out to be Stone. This put Stone's backers in a difficult position. They were forced to choose between Hardin, who was seen as a pawn of the railroads, or Goebel, who had turned against their man. Enough of them sided with Goebel to give him the nomination. Goebel's tactics, while not illegal, were unpopular and divided the party. A disgruntled faction calling themselves the "Honest Election Democrats" held a separate convention in Lexington and nominated John Y. Brown for governor.  Republican William S. Taylor defeated both Democratic candidates in the general election, but his margin over Goebel was only 2,383 votes. Democrats in the General Assembly began making accusations of voting irregularities in some counties, but in a surprise decision, the Board of Elections created by the Goebel Election Law and manned by three hand-picked Goebel Democrats, ruled 2-1 that the disputed ballots should count, saying the law gave them no legal power to reverse the official county results and that under the Kentucky Constitution the power to review the election lay in the General Assembly. The Assembly then invalidated enough Republican ballots to give the election to Goebel. The Assembly's Republican minority was incensed, as were voters in traditionally Republican districts. For several days, the state hovered on the brink of a possible civil war.

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