"If the referee thought it was a penalty by the goalkeeper then you either send him off or book him.
"I'm not blaming the player, he's done everything possible to try and get a goal against us through a penalty or his own work, but I'm disappointed because we want to see honesty and we want to see the referee get the correct decisions."
Blackburn manager Sam Allardyce defended Olsson.
"I think Martin might have got the slightest touch and gone down with the momentum - it's up for discussion," stated Allardyce.
Victory for Burnley would have boosted their survival bid and put them level on points with 17th-placed West Ham, although the Clarets have a vastly inferior goal difference.
Hull, in 18th spot and on 27 points, have a game in hand on Burnley and the Hammers.
"Is it over? No it's not over - the maths tell you it's not over, though we are certainly going to have to win three or possibly four games to get out of it," conceded Laws, whose side face Manchester City at home on Saturday before visiting Hull on 10 April.
We deserve more credit - Allardyce
"We have to make sure this does not deflate us too much before our next game."
Meanwhile, Allardyce commended his players for the win that took his side up to 10th in the table.
"We handled the local derby atmosphere well - we also had the wind and bobbly pitch to contend with," he added.
"Our attitude, professionalism and organisation has won the game. On chances created, we could have won it more comfortably."
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