They just can't cancel it. If you bring this up to the store manager, and they still refuse you a copy call the Headquarters and cite this, and if they still refuse to give you the preorder? You'd have a grounded base for a civil courts claim, because YOU did pay already for it with either YOUR, or YOUR parents money, and they cannot just say "thanks for the money! *YOINK*"
Well he hasn't quite paid for it yet, they actually charge you AFTER the game ships. (I am assuming that this is an online transaction) If he pre-ordered in store, then he would have paid about 5 or so dollars to reserve, and once the game comes out he can pay the rest of it. For some reason it sounds like the pre-order was canceled, so for one, he won't be charged on the credit card, and second, he can go get the reserve money back if he did it in-store. But most likely the canceled pre-order is caused by a now unusable credit card. I don't think Walmart is out trying to "gip" him.