U.S. gaming sector stocks surged Monday after the U.S. Supreme Court struck down a two-decades old law that prohibited New Jersey from allowing sports betting at state casinos.

The 7-2 ruling could pave the way for other U.S. states to challenge the 1992 Federal Professional and Amateur Sports Protection Act that effectively allowed only Nevada, Oregon, Delaware and Montana to offer full or limited facilities in the $150 billion sports betting market. 

"The legalization of sports gambling requires an important policy choice, but the choice is not ours to make," said Justice Samuel Alito for the majority. "Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own."

Alito said the law meant that "state legislatures are put under the direct control of Congress", and argued that "a more direct affront to state sovereignty is not easy to imagine."

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MGM Resorts International (MGM) - Get MGM Resorts International (MGM) Report shares rose 1.4% following the Supreme Court ruling, while Caesars Entertainment (CZR) - Get Caesars Entertainment Corporation Report was up 7.8%, and Boyd Gaming (BYD) - Get Boyd Gaming Corporation Report jumped 3.5%.

Racetrack operators Churchill Downs Inc. (CHDN) - Get Churchill Downs Incorporated Report added 5.6% while Penn National Gaming Inc. (PENN) - Get Penn National Gaming, Inc. Report  rose 4.3%.

New Jersey brought the case to the Supreme Court after a 2011 referendum, which won 63% voter support for sports betting at casinos and racetracks, was ultimately challenged by major professional sports leagues, including the NFL, as well as the governing body for collegiate sports, known as the NCAA.

"Today's Supreme Court ruling is welcome news to the millions of Americans who currently wager $150 billion illegally each year through off-shore, black market bookies," said DraftKings CEO Jason Robins. "States are now free to allow their residents to place mobile sports bets with licensed, trusted companies based in the U.S. and that pay taxes here."

U.K.-listed gaming stocks were also on the rise following the ruling, with William Hill PLC   (WIMHY) surging 7.57% to 304.3 pence each and rival Paddy Power Betfair PLC  (PDYPY) rising 7.74% to 7,655.00 pence in London trading.