In Heaven's Not Enough, Part 1. King realizes his year before Pete forfeits the game is almost up, and prays to summon him. Pete kidnaps Bailey as his avatar and turns King back into Joel. Cerberus finally comes for the watch and invites King to heaven. Bahamut gives him back the watch, in Heaven's Not Enough, Part 2 which allows him to transform between his human and dog form.
In the final showdown with Pete, in Heaven's Not Enough, Part 3, he snatches the watch and threatens to destroy it, but King is unfazed. After Pete and Spirit Dragon lose the Cosmic Game, Great Kitsune offers him a choice between the lantern and the watch, a comfortable life as a human, or life the way it is as a dog. King reaches for the stopwatch, turning into a dog forever, and the watch vanishes.