Trailing just 8-2 in a tight and fiercely fought Test match, the Canterbury Bulldogs prop thought he has scored after latching onto Josh Hodgson’s smark grubber kick in the 72nd minute.
Australian referee Gerard Sutton awarded it on the field but checked with his video officials - Englishmen Phil Bentham and James Child - who, after countless replays, decided Graham had failed to ground the bouncing ball correctly.
It was probably the correct call although it was rather irritating considering those Super League referees have given countless such calls the other way in the domestic competition this year.
It now means England must win in the third and final Test at a sold-out Wigan next Saturday to win a first series since Great Britain defeated the Kiwis in 2007.
head coach Steve McNamara may make changes for that with his side’s kicking game simply not up to scratch today and his three-quarters starved of decent possession.
Young Wigan scrum-half George Williams had a difficult afternoon but so did his more experienced half-back partner Gareth Widdop so Luke Gale, the Castleford Tigers No7, will be hopeful of having some involvement on debut.
England failed to recreate any of the forward dominance that had seen them win the first Test 26-12 in Hull.
Instead, the game was just what you would expect from a traditional Test match - defences on top, few chances of note and very little between the teams.
In fact, there was nothing between them at half-time after a tryless first period as they went in level 2-2, a rarity at any level.
Widdop gave England an eighth minute lead with a penalty but that was soon cancelled out by Issac Luke’s kick with Sutton not helping the game’s chances of finding fluidity with his overly fussy officiating.
It was the hosts, generally, who were forced to protect their goalline more regularity and they did that well, rarely unravelling and seeing the likes of Zak Hardaker, Liam Farrell and Kallum Watkins all come up with timely tackles.
Furthermore, desperate England winger Joe Burgess got his hand to a pass just as Jason Nightingale was primed to score tight to the touchline and Peta Hiku wasted the best chance when the stand-off spilled with the line at his mercy following Tohu Harris’ offload.
However, New Zealand didn’t help themselves with some shoddy attacking kicks which barely deserved to be “attacking” in all honesty, their absence of genuine Test quality halves patently obvious.
England weren’t much better in that area initially either until James Roby found a grubber that forced a drop-out .
There was no finish for McNamara’s side, though, and, instead it was the tourists who went ahead within just three minutes of the second period.
Widdop had let go his second forward pass of the afternoon to gift possession and Kodi Nikorima - the young scrum-half in as a late swap for Tuimoala Lolohea - attracted defenders before finding Harris, the powerful Melbourne Storm second-row who proved the best forward on the park and showed great handling to stoop low and provide his winger.
Kahu slotted the conversion from wide out and, though New Zealand full-back Roger Tuivasa-Sheck uncharacteristically dropped the restart offering England an immediate chance to respond, the hosts’ subsequent attack was too ponderous.
With their kicking game going AWOL, they failed to get any firm grip on the contest.
Although they did briefly threaten, Joe Burgess going close after Watkins finally got some quality ball and Widdop dummying but failing to see a gap open, there was still no success.
It was New Zealand rather who turned the screw, Hiku, the 22-year-old from Manly Sea Eagles, suddenly growing in confidence with every passing minute - and every kick.
The Kiwis forced three successive drop-outs as they finally re-discovered the art of kicking, penning England down ruthlessly.
However, the home side showed tremendous resolve and resilience to somehow keep them out for 24 tackles - the muscular Brett Ferres somehow denying Hiku over the line as he stepped past Williams - a feat that could conceivably have proved a turning point.
When Luke missed a simple penalty attempt near the posts in the 70th minute to still leave it just 8-2, England knew they could still escape.
However, Graham failed to apply that finish and Kahu rubbed it in with a drop goal three minutes from time as the Kiwis edged home.
England: Hardaker; Burgess, Watkins, Bateman, Hall; Widdop, Williams; Graham, Hodgson, Hill, Whitehead, Farrell, O’Loughlin. Substitutes: Roby, T Burgess, Cooper, Ferres.
New Zealand: Tuivasa-Sheck; Kenny-Dowall, Whare, Kahu, Nightingale; Hiku, Nikorima; Bromwich, Luke, Moa, Proctor, Harris, Blair. Substitutes: Brown, Taupau, Matulino, Glenn.
Referee: Gerard Sutton (Australia)