Ah bless, I used to be exactly the same, even to the point of reading under the curtain until j could only make out one letter in three (still enough to keep reading!). I'm not sure that I would be overly strict about it - I disagree that it would be the same as a playstation, reading is good for the brain and usually you sleep well after reading (ie it doesn't overstimulate you).
When I was a bit older I even read throughout the entire night on occasion if I was too scared to sleep (eg if I had been watching Jaws, although how a killer whale would come and get me on the first floor up a hill I don't know). If it's any consolation, I've got a fairly impressive academic record.
My parents used to come and tell me lights out, time to stop at the given time, and then come back in after another 15 mins or so to check I wasn't still reading. Sometimes I would pretend to be asleep though, and still carry on, so you might have to check a few times (and do an early lights off to allow for sneaky Reading afterwards). I think it's best if she learns to manage her own sleep and reading if possible.
I guess it was a bit easier in the 70s though, as books were still expensive, so once I was through my 5 book a week allocation from the library, that was it.