Nome, Alaska, was without a doubt the world's premier gold mining town during the first decade of the twentieth century. It was cut off from the rest of the world in a way that is difficult for us to imagine today. The nearest U.S. city was Seattle, Washington, a two-month journey by dogteam in the winter. Bering Sea ice kept Nome closed as a port seven months of the year. The telegraph was the only possible communications link to the Outside, and dog teams were the only practicable transport system.

Nome miners decided that not only was late-winter amusement a necessity, but that it would be a good idea to promote the rearing and improvement of sleddogs. In 1907 the Nome Kennel Club was organised; a well-known Nome lawyer, Albert Fink, was elected president. The following year the first All Alaska Sweepstakes was run, organised and run by the Nome Kennel Club. A course of 204 miles was laid out from Nome to Candle over a variety of challenging terrain, roughly following the route of the telegraph line. Race rules were established which to a surprising extent are still followed in the sport of dogsled racing today. The race was to be continuous from Nome to Candle and back to Nome for a total distance of 408 miles, and the race always took place in April.

The first running of the "Nome Sweepstakes" in 1908 was somewhat experimental; the usual heavy freight sleds were used and teams started at two-hour intervals. The winning driver was John Hegness using "mixed malemute" dogs and his time was 119 hours 15 minutes. The following year lightweight specially-built racing sleds were used and the starting interval reduced to 15 minutes. The 1909 winner was the famous Arthur A. (Scotty) Allen, driving mixed malemutes. But 1909 was also the year that dogs from Siberia were first raced in Alaska. A Russian trader named Goosak had brought a team of 10 dogs across the Bering Strait and entered them in the AAS, driven by Louis Thurstrup.

Nome Sweepstakes headquarters was the Nome Board of Trade Saloon, where a telegraph apparatus was set up to receive up-to-the-minute reports from the trail and a large chalkboard kept track of the teams. Wagering was a major aspect of the race, and in 1909 the betting heavily favoured Scotty Allan. So little did the Nome miners think of the "little Siberian rats" driven by Thurstrup that the team was given 100 to 1 betting odds. Fourteen teams started the race, but a violent blizzard blew up that day, eliminating all but three of the teams from competition. Two of these were Allan's dogs, and the other was the Thurstrup team. Scotty Allan reached Topkok Roadhouse and continued on, stopping sixty-six miles into the race. The Siberian team became stormbound at the Roadhouse fifty miles out. The weather cleared the second day. Allan's team was first to arrive in Candle, but the Siberians arrived close on its heels, despite a much later start. The Thurstrup team checked in at Candle, but immediately turned around on the back trail to Nome, despite having travelled over 150 miles that day.

Exactly what happened thereafter is somewhat conjectural. Obviously the arrival of the Thurstrup team on the heels of Scotty Allan and its immediate turnaround when Allan's team was bedded down for a seven-hour rest would have put the wind up the bettors. There were rumours of attempted interference with the Thurstrup team and to this day some insist that Thurstrup was met on the trail and bribed to take his time. At 100 to 1 odds, the payout for bets on the Thurstrup team, had it won, would have broken the Bank of Nome, it is said. Whether there was interference, whether the Siberian team suffered from too little rest, or whether the driver became snowblind (all are popular theories), the result was that Goosak's dogs finished in third place.