Knowing a defeat would dash the Raiders' ambitions of finishing with a winning record, effectively concluding their top-eight ambitions, the Green Machine's campaign looked alive when Gagai was penalised for initiating a push and shove metres from the Knights' line.
But the visitors challenged the decision and the bunker found that Horsburgh had slapped the Knights centre and he was sent to the sin bin in the 73rd minute.
With the Knights leading 26-24, minutes later birthday boy Dominic Young crossed for his second try in the right corner to seal the victory on Sunday at GIO Stadium.
"We should have gone 26-all and there was a brain explosion. It was a f***ing brain explosion, and we lost the opportunity," Stuart said.
"There was one last week or the week before with Alex Twal. Everyone knows you're not allowed to do that.
"We lost the start of the season because we were self-entitled and undisciplined and we lost the opportunity to continue trying to make the semis."
Unless a mathematical miracle occurs, Canberra (9-12) will become the first team since the Sydney Roosters in 2016 to miss out on playing finals footy the year after claiming the minor premiership, as they sit six points adrift of eighth-placed North Queensland.
Unlike the Raiders, Newcastle (13-8) are one step closer to completing a remarkable turnaround by punching their ticket to the post-season after finishing with the wooden spoon last year.
The fearless win also came despite the Knights' injury list ballooning, with centre Bradman Best and hooker Phoenix Crossland (both calf) ruled out, joining halfback Dylan Brown and second-rower Dylan Lucas on the sidelines.
Coach Justin Holbrook expects Best and Crossland to return for their clash against Gold Coast next Sunday.
"Harrison Graham and Fletcher Hunt just came in and didn't miss a beat," Holbrook said.
"The way we had to fight really hard to win is the way he (Tyson Frizell) has played his whole career, so I'm really pleased."
Newcastle, who were buoyed by Tyson Frizell's 300th match, scored the first two tries, but Raiders winger Jed Stuart intercepted a looping Kalyn Ponga pass and ran 70 metres before Zac Hosking snuck over to level the contest.
The Knights hit back when Young tore down the right flank and gave the ball to a running Ponga.
Despite Stuart admitting Simi Sasagi shouldn't be playing as he battled with an arm injury, the centre crossed twice either side of halftime to take the lead for the home team.
But Gagai capitalised on a blistering Young run, before the winger completed the victory in the 78th minute.
