Casino stocks soared after the Supreme Court Monday refused to hear a court case, effectively legalizing bingo style gaming devices and giving game manufacturers a new business market to spur growth. In reaction, Wall Street analysts boosted 2005 earnings estimates and raised ratings. J.P. Morgan upgraded International Game Technology ( IGT) and Alliance Gaming ( AGI) to overweight from neutral, telling investors that the Supreme Court's decision to dismiss a case over the legality of Class II gaming devices has finally settled the issue. Based on the Court's refusal to hear the case, Class II devices are, in effect, legal, which could lead to higher earnings for slot machine makers, who have been unable to make an aggressive move into the market because of legal concerns. Last year, the Department of Justice filed an appeal with the top court, hoping to overturn a pair of Oklahoma court decisions that legalized electronic Class II devices, where players gamble against each other for a communal jackpot. The rise of electronic gaming devices has blurred the line between the bingo-style units and slot machines, which are Class III devices and are legally allowed under a compact. In the DOJ's view, the electronic Class II devices worked like Class III devices and were subject to restriction and taxation from states under the Johnson Act, which governs gaming on Indian lands. "With the approval from the nation's highest court, we believe that Class II gaming finally has the clarity needed for tribes and slot manufacturers to pursue Class II gaming more aggressively," said Harry Curtis, J.P. Morgan gaming analyst, in his upgrade. "On first blush, we estimate the number of Class II machines could grow by 100,000 machines." Last week, analysts were betting that the Supreme Court was likely to hear the case, which could have delayed the market opportunity for years. In reaction to the surprise announcement, casino stocks hit a fresh batch of 52-week-highs on Monday. The Dow Jones Casino Index rose 4.8%, led by IGT up $3.15, or 8%, to $42.39, and Alliance up $3.25, or 13.4%, to $27.51. Multimedia Games ( MGAM) rose $2.85, or 13.6%, to $23.85, while WMS Industries ( WMS) rose $2.35, or 8.8%, to $28.92. J.P. Morgan said IGT could be a big winner, predicting the company could capture half of the Class II market going forward, which would net between $550 million and $730 million in incremental revenue. Other analysts had less optimistic predictions, but still felt the news was enormously beneficial to IGT's position. Fulcrum Global Partners analyst Joseph Greff said revenue could increase by $456 million, adding 30 cents to earnings per share. Multimedia Games, which is a big maker of Class II games, will benefit from the fact that the legal concerns about its business have gone away for now. And while the Court's decision paves the way for increased competition, Eric Hausler, analyst at Susquehanna Financial Group, said the news was positive and investors would "increasingly value the business based on its growth prospects and assign it a more realistic multiple." In the near term, Hausler said that regulations from the National Indian Gaming Commission would likely take hold, but the issue could come up again. "Longer term, Congress may take another look at Class II/Class III expansion as we think a backlash against Native American gaming could build," he said, "especially if the states continue to complain about losing out on the economics of noncompacted gaming."