I am interested in knowing the origins of this useful result, but I haven't been able to precisely pinpoint the context of its first use. Most texts seem to indicate the result originally comes from Felix Klein, though the lemma is sometimes referred as Schottky's criterion. I would also like to know what the original formulation looks like, if anyone knows it.
Thank you so much for your help!
Edit: this was crossposted to History of Science and Mathematics Stackexchange.
Tits in the famous "Tits alternative" paper (1972) provides a "free product" version of the ping-pong lemma. He then mentions in an "added in proof" footnote: "R. Lyndon has pointed out to the author that a similar criterion has been given by A. Macbeath (Proc Cambridge Ph. Soc. 1963). Cf also R. Lyndon and J. Ullman (Mich. Math J 1968) (...)."
Here's the abstract of Macbeath's paper (link behind paywall)
Possibly the principle appeared much earlier. One often refers to Schottky subgroups, so a look at Schottky's works at the beginning of the 20th century, would be worth.