Is there a Downloads item in the Store area of the column on the left side of iTunes? If so then you can click on it, click on the stalled download, and delete it.
Edited to add
There are a couple of places you might check after quitting iTunes. The first is
Make sure it's empty, and if not, remove what's in there (set it aside so you can put it back if it confuses iTunes later).
The other place is:
and look for the file
DexteGame.ipa or whatever the game is called). Delete this file -- it's the actual now-outdated game that iTunes is trying to update.
Otherwise iTunes has the need to download it stored in its database and doesn't care about files.
I take it that agreeing to the download doesn't help?