Independent candidate for the Dubbo state district Mathew Dickerson says he's 'disappointed' in the electoral results but has wished Dugald Sanders the best of luck.
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Dubbo MP Dugald Saunders earned 52.02 per cent of the votes in the final count.
Mr Saunders finished in front by 1550 votes for a total of 19,920, while Mr Dickerson was on 18,370.
Despite the results, Mr Dickerson said he looked forward to positives from the election.
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"The seat was formerly considered very safe with a 20.42 per cent margin and was easy for the government to ignore," Mr Dickerson said.
"We now have the third most marginal seat in government at 2.02 per cent and this should result in additional attention being paid to this seat. The government understands that it can't ignore a seat where residents have shown they will vote on the issues."
Mr Dickerson has ruled out running in the upcoming federal election or standing again for Dubbo Regional Council.
He said he would continue to work on his business interests and contribute to the community through his ongoing practices.
"Thank you to all of the wonderful support given to me by the wider community and I can assure residents I worked incredibly hard to deliver the right result. Unfortunately, I fell just short," Mr Dickerson said.
He also thanked the 271 volunteers "from all walks of life" who helped throughout his election campaign.
