Kelley served under George Armstrong Custer in the army and came to Fort Dodge in 1872 when Custer’s 7th cavalry was transferred there. He loved to hunt and race the greyhounds, and when he was honorably discharged in 1872, Custer gave him a dozen greyhounds as a gift. This was how he acquired the nickname of “Dog.”
He then went to Dodge City, where he associated with P.L. Beatty in the restaurant business. Beatty became the acting mayor in 1875, and James Kelley later followed in 1877, a position he held until 1881. During this time, the early city government and law enforcement were controlled by a group of men referred to as the “gang.” These men were merchants, saloonkeepers, and gamblers in favor of a wide-open town to accommodate the Texas cowboys, with Kelly in the lead. However, in May 1877, those same cowboys had become so rough and rowdy that he wired Wyatt Earp, who was then in Deadwood, South Dakota, to return to Dodge to help tame the lawless men who were shooting up the town. When he returned, Wyatt was made the new town marshal and deputized his brother Morgan. He plagued the courts for more severe sentencing, barred certain men from the town, and organized a “citizens’ committee” of reformers to help watchdog the streets.
During this time, Kelley had a relationship with an employee, singer Dora Hand. Appearing in several variety shows under her stage name of Fannie Keenan, the actress was staying at Mayor James Kelley’s house as he was out of town. Unfortunately, Kelly had gotten into a dispute with a man named James Kennedy, the son of a Tascosa, Texas cattleman. In October of 1878, James Kenedy, in an attempt to murder Mayor Kelley, mistakenly killed Hand in a “ride-by” shooting at Kelley’s house. The performer was just 34-years-old.
By the time Kelley’s term of mayor was over in 1881, the town had begun to settle down. He continued his restaurant partnership with Beatty until 1885, when the wood-frame building burned down. He then began to build the Kelly Opera House, which opened the next year at the corner of Front Street and First Avenue. It quickly became not only the finest establishment in Dodge City but one of the best in Kansas.
Unfortunately, he lost his property in the Panic of the late 1880s and then spent the next years at Fort Dodge, Kansas. There, he oversaw the “Angel Barracks,” home to the old widowers. He passed away on September 9, 1912, from tuberculosis at the age of 79. He was buried at the Fort Dodge Cemetery.