If the rules of the contest are specific about who may or may not enter, I say the gun shop owners were in the wrong for entering.
That said, I'm glad the gun shop is using this event to publicly expose Staples as a company that does not support a legal activity (last I checked). By excluding certain legal business and lumping them in with criminals, Staples has cut their noses off to spite their faces. Those of us on the right have been reluctant to participate in boycotts of businesses but I think it is time most of us rethink that position. I know I have!