The trio were found guilty in 2021 over a coal exploration licence conspiracy following a lengthy investigation by the NSW Independent Commission Against Corruption.
On Friday, the NSW Court of Criminal Appeal dismissed an appeal to have their convictions overturned.
Eddie Obeid became a symbol of political corruption in NSW and spurred a crackdown on dishonest behaviour in the state's upper echelons.
In October 2021, Justice Elizabeth Fullerton jailed the now close to 80-year-old for at least three years and 10 months, his son for at least three years and the now 74-year-old Macdonald for at least five years and three months.
She found all three guilty of conspiring for the then-state resources minister Macdonald to engage in misconduct between 2007 and 2009 following a lengthy and complex judge-alone trial.
Macdonald was found to have provided confidential information to the Obeids over a coal exploration licence that delivered a $30 million windfall to their family.
On Friday, Macdonald failed in a separate appeal to have his sentence shortened.
His lawyers argued, among other grounds, that the five-year minimum sentence was manifestly excessive and the judge's conclusion that the objective seriousness of the conspiracy was "of the highest order" was not correct.
Chief Justice Andrew Bell was one of three judges to uphold the sentence, calling it appropriate and in line with the seriousness of the offence.
"Actions utterly corrosive of public trust by a minister of the Crown do unquantifiable damage to our democracy," he said.
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