Emergency services descended on Walcha's showgrounds, 90km from Tamworth in NSW, after a crash at the weekend Walcha Motorcycle Rally.
An on-track collision in the demolition derby sent a speedway car with a 27-year-old driver crashing through the fence and into a mobile grandstand, NSW police said.
Thirteen people were injured in the crash.
Two were flown to John Hunter Hospital in a critical condition - a man in his 50s suffered spinal and hip injuries and a man in his 30s had a head injury.
A hospital spokesman told AAP on Sunday morning the condition of the men had improved to serious but stable.
The 11 other victims, aged 20 to 75, were transported to hospitals in Armidale, Tamworth and Walcha.
Six had serious injuries.
Walcha Council mayor Eric Noakes said some of those injured were locals.
"I'm up at the showground now and it's a pretty solemn place," he told AAP on Sunday.
"Nobody expected this outcome out of a thing like this.
"We're a very small community ... council's and the community's thoughts are with the affected people and their families."
Mr Noakes, who was at home at the time of the crash due to heavy rain, described it as a "freak accident".
"Freak accidents happen," he said.
"Not excusing it but you never see these things coming."
In addition to the demolition derby, the annual rally features a motorcycle street procession, barrel racing, a show and shine and postie bike events.
The event's future is set to face scrutiny, with the mayor confirming council will review its position.
"It's been a five-year event but things like this - we'll certainly reassess our position," Mr Noakes said.
"I'm only the mayor and don't understand a lot of what sits behind reassessing it and our risk analysis.
"That'll be something we'll look at."
Federal MP for New England Barnaby Joyce and state MP for Northern Tablelands Brendan Moylan sent their thoughts to those injured and praised the efforts of emergency workers and bystanders.
"Thank you to all the off-duty nurses and first responders who immediately dropped everything to help the injured in the storm," the former deputy prime minister wrote on social media.
"Such a sad end to such a great event."
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