This is a tough situation. I think you need to ask yourself.."How good of a friend is he?" If it is just a "hunting buddy" then sure maybe it's time to give it to him straight. However if this is a good friend is it really worth losing him over a deer? I dont know about you, but I have plenty of buds but a GOOD friend is hard to come by! Gd Luck with your decision!!
I think if he truly feels bad about breaking the rules and honestly misjudged the deer (because it happens) than let it slide but if he if just doesn't get why the rules are in place than you must explain ... nicely ... and keep the friendship intact.
