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The film's title card reads: "Damon Runyon's The Lemon Drop Kid." Runyon's original short story was later published in his collection Blue Plate Special (New York, 1934). The order of the opening cast credits differs from the end credits, and some names appear only in the end credits. The story opens with the following written statement: "This is a race track in Florida. Damon Runyon frequented such race tracks, for it was there that he met many of the people he wrote about...horse owners, trainers, jockeys, grooms, gamblers, pickpockets....There are many sources from which those who bet receive their information about the horses. Damon Runyon wrote about an interesting source of mis-information called 'The Lemon Drop Kid.'"
Ray Livingston and Jay Evans' song "Silver Bells" was first performed in The Lemon Drop Kid and quickly became a Christmas standard. Bing Crosby, Bob Hope's frequent co-star, made the first recording of the song. Hollywood Reporter news items list the following actors in the cast: Al Klein, James Cornell, Margaret Zane, Janet King, Noreen Lee, George Barrows, Chuck Hamilton, George Magrill, Marie Thomas, Susanne Rosser, Franklyn Farnum, Marie Reeves, Margaret Roberts, Jack Ellis, Rex Foster, Kenneth Kendall, Thelma Woodruff, Paul Lacy, Rex Moore, Norma Fenton, Shirley Anderson, Dick Cherney, Richard Clark, Marilyn Caplan, Brick Sullivan, Harry Wilson, Mae George, Stephen Gordon, Michael Cowan, Virginia Olson, Martin Lessow, Ann Beck, Peggy Dale, Barbara Painter, Mildred Baer, Charles Millsfield, Freeman High, Mary Moder, John Ardizoni, Marian Mosick, Lynnette Bryant, Charles Booker, Helen St. Rayner, Linda Garrison, Joy McDade, Jim Pierce, Evelyn Cedar, Wally Boyle, Jerry Housner, Lyle Moraine, Joan Arnold and Lee Winter. The appearance of these actors in the completed film has not been confirmed. Studio publicity materials include vaudevillians The Cirillo Brothers in the cast, but their appearance in the final film also has not been confirmed.
The Lemon Drop Kid marked Hope's second appearance in a Runyon story. In 1949, he made the highly successful Paramount release Sorrowful Jones, which was based on Runyon's short story "Little Miss Marker" (see AFI Catalog of Feature Films, 1941-50). Screenwriter Edmund Hartmann worked on both pictures, and both films were produced by Robert L. Welch and directed by Sidney Lanfield. According to modern sources, Hope wanted January Sterling as his co-star, but because of delays due to script problems, she could not participate. Principal photography ended in mid-August 1950, but as noted in Hollywood Reporter news items, the film went back into production in mid-November 1950. Modern sources state that after viewing a rough cut of the picture, Hope asked Paramount to hire Frank Tashlin to do some rewrites and that Tashlin agreed on condition that he could also direct the retakes. According to modern sources, Tashlin rewrote and directed the elaborate "Silver Bells" sequence. Charley Cooley, who plays "Goomba" in the film, was Hope's former vaudeville partner and boyhood friend. According to studio publicity, the Florida horseracing scene was shot at the Santa Anita Racetrack in Arcadia, CA.
Hope and Marilyn Maxwell reprised their roles for a December 10, 1951 Lux Radio Theatre broadcast. In 1934, Paramount had released a film called The Lemon Drop Kid, directed by Marshall Neilan and starred Lee Tracy (see AFI Catalog of Feature Films, 1931-40), which was also based on the Runyon short story. The plot of the earlier picture has few similarities to the 1951 picture, and although neither film is completely faithful to Runyon's original story, the 1934 version more closely resembles it. William Frawley, who portrayed "Gloomy Miller" in the 1951 picture, also appeared in the 1934 film, as The Kid's sidekick "The Professor."