Scunthorpe's leading marksman Gary Hooper converted from the spot for his second goal of the game, to secure a 2-2 draw.
"It should never have been a penalty," insisted a furious Mackay after the game.
"The ball has hit DeMerit flush in the face at 100 miles an hour and after the game I took my player to see the referee to show him the state of his eye where the ball has hit him.
"The linesman, who was much nearer, has signalled for a corner but the referee has given a penalty which I find incredible.
"It was one of a series of strange decisions that we got from him this afternoon.
"To referee a game at Championship level requires an official with some experience and I don't think this referee has handled many games like this."
kay was disappointed his side had not capitalised on a dominant performance in the opening 45 minutes against a tired-looking Scunthorpe outfit.
The visitors monopolised but could not find their finishing touch in front of goal.
Instead it was Scunthorpe who snatched the lead against the run of play in the 42nd minute when a through-ball from Paul Hayes split the Watford defence wide open and Hooper raced in behind to finish with a well-taken shot past goalkeeper Scott Loach.
Watford were back on level terms in the 64th minute when striker Danny Graham fired home after the Scunthorpe defence had failed to deal with a right-wing corner.
The visitors were then reduced to 10 men after 82 minutes when midfielder Tom Cleverley was shown a straight red card for his high challenge on Scunthorpe's Michael O'Connor.
But Watford then seemed set for victory when, in the last minute of normal time, John Eustace headed them in front from a left-wing corner.
However Hooper saved Scunthorpe a point from the spot with his 13th goal of the season.
"I'm very disappointed with the result in more ways than one," said Mackay.
"We had enough chances in the first half to have been three or four goals ahead and have got to learn to be more clinical in front of goal."
Scunthorpe manager Nigel Adkins was relieved to see his side salvage a draw, but still felt they had done enough to claim victory.
"We have got to look at this game as two points dropped," he said.
"We did not get going in the first half and about the only decent bit of football we put together saw us go in front with an excellent finish from Hooper.
"It underlined his value that he has to our side and he so nearly struck again early in the second half.
"We want to be a good passing team but sometimes the state of the winter pitches does not allow that.
"I thought we played much better in the second half and to concede two goals from set-pieces is really disappointing.
"We felt Watford's opening goal should not have been allowed because there was a clear foul on our goalkeeper but then the referee has had an interesting game.
"I'm sure though that it was handball for the penalty which has earned us a point.
"It's another step for us in the right direction. Our home form is good and we have got to continue building on it."