Alpha Hospitality To Acquire All Rights To Monticello Raceway.

Business Editors

NORTHBROOK, Ill.--(BUSINESS WIRE)--Feb. 4, 2003

Alpha Hospitality Corporation (NASDAQ and BSE: ALHY) announced today that it has entered into a Letter of Intent with Catskill Development, LLC ("Catskill"), its partner in developing gaming activities owned by Catskill at the Monticello Raceway (the "Raceway") and other related entities.

The agreement provides for the Company to acquire a 48 year ground lease on the Raceway and contiguous properties, together with all of Catskill's development and management rights with respect to the site and related gaming activities, in exchange for an 80.25% position in the Company's common stock.

"The agreements contained in this Letter of Intent position the Company to move forward more quickly with the development of the Raceway property, " said Robert Berman, Chairman and Chief Executive Officer of the Company. According to Berman, the recapitalization arrangement that the Company entered into last December set the stage for the consolidation of the various real estate, development and gaming management interests involved in the effort to revitalize and develop the Raceway assets. "With the cooperation of our real estate and development partners, Alpha will be able to move from the position of a passive partner to the position of an active prime mover in the development effort," said Berman.

According to the Company's Chief Financial Officer, Scott Kaniewski, the agreements will assist in strengthening the Company's financial operations. "When and if the agreements reflected in the Letter of Intent are consummated, Alpha will be responsible for the ownership and operation of the Raceway and will be entitled to the net income of the racetrack and future VLT operation, if any," Kaniewski said.

The Letter of Intent provides for Catskill to lease its 230-acre Raceway property to the Company for a period of 48 years for an annual base rent of $1,800,000. Lease terms are to contain certain options for the Company to acquire title to portions of the property. The Company will have the right to purchase a 29-acre parcel for the purpose of placing it in trust for a Native American Tribe or Nation at the purchase price of $1. The exercise of such option will require obtaining necessary federal and state approvals. In addition, the remaining property may be purchased within two years of the opening of a casino at the present value of the ground lease at the time of such exercise.

Prior to consummating the transactions provided for in the Letter of Intent, the Company must take all steps necessary to cause Bryanston Group, Inc. and related parties to relinquish their ownership of Alpha's common shares pursuant to a Recapitalization Agreement dated December 10, 2002. Upon consummation of the transaction, the Company will relinquish all interests in Catskill, which will remain the owner of the Raceway subject to the ground lease and the owners of Catskill will have a controlling interest in the Company.

The Letter of Intent provides for the Catskill Board of Directors to be restructured and anti-takeover provisions to be adopted by the Company. The Company is also expected to change its name.

Affiliates of the Company and Catskill have been involved in litigation against Park Place Entertainment Corporation (NYSE-PPE) and are currently appealing a district Court decision dismissing certain claims and granting summary judgment against them on the remaining claim. Briefs in the appeal are expected to be filed within the next sixty days. The Letter of Intent also provides for the Company to establish a litigation trust into which all of the claims are to be transferred. The Company is to provide the litigation trust with a non-refundable line of credit of $2,500,000 towards the payment of any future costs of the litigation. The Company is to distribute undivided proportionate interests in the trust to all shareholders of record immediately following the closing of the transaction.

The agreement is subject to the execution of definitive agreements, approvals by the Company's Board of Directors and an opinion that the transaction will be tax-free to all parties and other technical requirements, including a fairness opinion. No assurance can be given that the transactions provided for in the Letter of Intent will ultimately occur or will occur at the times and on the terms and conditions contained in the Letter of Intent.

To the extent the content of this press release includes forward-looking statements, they involve risks and uncertainties that are described from time to time in Alpha's reports filed with the Securities and Exchange Commission. Alpha wishes to caution readers not to place undue reliance on such forward-looking statements, which statements are made pursuant to the Private Securities Litigation Reform Act of 1994, and as such, speak only as of the date made.