Laws described the Iron's display in the 2-1 home defeat as one of their best of the season but felt the visitors should have had a player sent off early on in the game.
"Coventry should have been down to 10 men when their centre half (William Edjenguele) chopped off Andy Barcham when he would have been clean through on goal early in the first half," fumed Laws.
"It was a red card offence but the referee took no action. It was a major, major decision that could have changed the game and you hope referees get these right.
"But he got it completely wrong. The fourth official knows he did and so does everybody else. Even the assessor was shaking his head."
Defeat leaves Scunthorpe still hovering one place above the bottom four, but Laws remains upbeat about his team's survival hopes.
"This was one of our best home performances of the season - and against a very good Coventry team," he insisted. "We passed them off the park for long spells and they had to change their format to cope.
"But if I have to be critical about us, then we should have finished them of when we were on top in the early stages. But Barcham has missed one great chance and Karl Hawley has missed another.
"Obviously it is disappointing to be beaten because we deserved better than that. But it has done nothing to dampen our spirit and if we continue to play like this, then I am sure we will win more games than we lose.
"This is just one that we have got to take on the chin."