An Iowa company moved closer to building a new Kansas City casino Wednesday and the state Gaming Commission withdrew a proposed rule that would have allowed casinos to move within two miles without applying for a new license.

The company running St. Louis' President Casino and the city's redevelopment corporation had challenged the proposed rule. They said there should be more flexibility to allow cities and counties to decide where casinos can locate.

The rule would have required a new license with competitive bidding when a casino wanted to move more than two miles. Facilities seeking to relocate within two miles _ as long as the new spot was at least two miles from another city _ would need approval from the Gaming Commission.

Jerry Riffel, an attorney representing Pinnacle Entertainment Inc., told a legislative committee reviewing the rule that it would violate state law that allows gambling in Missouri. He said that's because the law envisions floating gambling boats, which could use multiple docks as long as that city or county approved it.

The Joint Committee on Administrative Rules hears challenges to regulations created by executive branch agencies. The committee is supposed to consider only whether the proposed rule fits within state laws and if it is arbitrary and capricious.

That panel recessed Wednesday afternoon before it could decide whether to accept the licensing rule, but several members said the Gaming Commission should repeal the two-mile portion. Only one lawmaker said it fit the legal requirements and should stand.

During an afternoon break, the Gaming Commission submitted notice it was withdrawing the rule.