Commentary: Gov. Polis veto backs AI innovation in Colorado

As a longtime technologist, I have long admired how Colorado has prioritized being a hub for innovation and technology. The growth of Colorado’s tech sector, which directly accounts for 10 percent of the state’s employment, has helped create 47,440 net new jobs over the past five years, making it the state’s most significant source of job growth. From the bustling tech corridor along the Front Range to the numerous startups emerging each year in Boulder, Denver, and beyond, Colorado, also known as the Centennial State, is one of the most vibrant technology economies in the country.

That’s why I’m so pleased that, on May 29, Gov. Polis vetoed a bill, HB 25-1004, targeting one corner of that innovation economy: artificial intelligence.

The legislation targeted so-called “algorithmic pricing tools,” software that helps landlords set rental rates based on real-time data, such as vacancy rates, seasonal demand trends and neighborhood pricing. These tools are the real estate equivalent of Kelley Blue Book or Carvana, they don’t fix prices or control the market, they help property owners make informed, competitive decisions.

Far from being a problem, it reduces human error, improves efficiency, and brings prices closer to real-time supply and demand. That’s exactly what good AI tools are designed to do: increase fairness and efficiency in a fragmented market.

At first glance, this might seem like a narrow issue affecting only renters. But AI professors and analysts believe HB 25-1004 was about more than housing. They saw it as the first test of whether Colorado will allow AI to continue running across all industries in the long term.

If HB 25-1004 went into effect, it would have been one of the first times any U.S. state banned a specific use of AI outright, not because it failed a safety test or posed a national security risk.  That would have set a chilling precedent that could have reverberated nationwide.

It makes sense that Gov. Polis had concerns about this bill. His background gives him a unique perspective.

Before entering public service, he was a tech entrepreneur. He founded internet startups and experienced firsthand how innovation can create jobs, reduce inefficiencies, and deliver better services. He has consistently championed the use of data and technology to improve public outcomes, from healthcare to education to transportation. That’s why, time and again, Gov. Polis has used his veto pen to stop legislative overreach that threatens Colorado’s innovation economy, and he was right to do it again here.

Supporters of the ban argue that algorithmic pricing drives up rents. But the evidence doesn’t support that. In fact, recent data from the Apartment Association of Metro Denver shows rental prices are falling. In the first three months of this year, average rents in the Denver metro area dropped by $56 compared to the same period last year, to $1,819, below 2022 levels. If pricing software were fueling rent hikes, Colorado would be seeing the opposite trend.

The real cause of Colorado’s housing affordability crisis is well known: Supply has failed to keep up with demand. Addressing this issue requires serious action on zoning, permitting and construction incentives, not scapegoating software.

Colorado has worked hard to become a magnet for startups and technologists. If this bill became law, it would have signaled to AI companies across the country: Don’t build here. 

Policymaking should be guided by data and principles, not fear. AI is already transforming industries from healthcare to agriculture, and with the right guardrails, it can make life better for Coloradans across the board.

Gov. Polis made the right call. He has long stood for evidence-based innovation, and by vetoing this bill, he reaffirmed that vision, ensuring that Colorado will continue to lead the nation in tech innovation. Now, Colorado must double down and lead the nation in building a future where AI works for everyone.

Oren Etzioni, Ph.D., a technologist and AI expert, is the founding CEO of the Allen Institute for Artificial Intelligence and is a Professor Emeritus of Computer Science.