Alpha Terminates Letter of Intent.

NEW YORK--(BUSINESS WIRE)--Oct. 7, 1998--Alpha Hospitality Corporation (NASDAQ - ALHY; BSE - ALH; WARRANTS: NASDAQ - ALHYW; BSE - ALHW)(the "Company") announced today that the company and Southern Classic, Inc. ("Southern") have mutually agreed to terminate the Letter of Intent authorizing the company to acquire all of Southern's outstanding shares. Southern is a closely held corporation involved in the retail sales of manufactured housing based in Ocala, Florida. Today's agreement was deemed in the best interests of both parties' stockholders.

It was determined that in view of Southern's brief operational history at certain of its newer locations, it would be beneficial to both parties to terminate the agreement until such time as Southern achieves a more established operating history at those locations. The company intends to investigate other opportunities in the manufactured housing industry and may, in the future, pursue such opportunities with Southern.

The company continues its pursuit of all acquisition prospects including, but not limited to, the gaming and hospitality areas, as well as manufactured housing.

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 the company's reports filed with the Securities and Exchange Commission. The company 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.