On May 11, 2026, the Colorado Senate gave HB 1263 — the Conversational AI Service Operator Requirements Act — final passage on a 24-11 vote, with House concurrence on May 12 by a 40-24 margin. The bill, sponsored by Rep. Sean Camacho (D-Denver), now heads to Governor Jared Polis, who has signaled industry sympathy but has not publicly stated whether he will sign, veto, or let the bill become law without his signature. If enacted, HB 1263 would impose Colorado-specific operator obligations on AI chatbot services — including bans on providing minors with engagement-based "points or rewards," reasonable measures to prevent chatbots from generating sexually explicit material, and provisions blocking chatbots from making statements that "simulate emotional dependence."

Why It Matters

Colorado HB 1263's engagement-rewards ban and emotional-dependence-simulation prohibition are the most specific operator-level constraints any state has yet imposed on AI-companion business models. If Polis signs, the next 90 days of compliance preparation by Character.AI, Replika, Candy.AI, and DreamGF will likely produce concrete product changes — particularly around streak mechanics, daily-check-in rewards, and the affectionate-language patterns that drive user retention and ARPU. Combined with the federal GUARD Act advancing through Senate Judiciary, the Pennsylvania medical-impersonation lawsuit against Character.AI, and Georgia SB 540's no-carve-out structure, the AI-companion category is now facing the most concentrated regulatory pressure of any sex-tech-adjacent segment in 2026.

Camacho introduced HB 1263 in response to constituent reports — including parents who told Colorado Newsline that their children had been "sexually groomed" by chatbots before self-harming. The bill's structure aligns with the broader AI-companion regulation wave but adds two provisions that distinguish it from the Oregon, Washington, and Georgia frameworks: (1) the affirmative ban on engagement-reward mechanics for minor accounts, which targets Replika and Character.AI's gamified retention loops directly, and (2) the explicit prohibition on statements simulating emotional dependence, which addresses the core therapeutic-mimicry pattern that has driven multiple wrongful-death and PA-Attorney-General actions against AI-companion operators in 2026.

The Polis question matters. The governor is a former tech investor (Techstars, ProFlowers) and has positioned himself as one of the most pro-industry Democratic governors in the country — he vetoed Colorado's 2024 AI consumer-protection bill and signaled openness to vetoing 2025 AI workplace legislation before the legislature negotiated changes. Tech-policy advocates in Colorado expect the chatbot-specific scope of HB 1263 (vs. general-purpose AI regulation) and the bipartisan record vote (40-24 in the House includes Republican support) to make a veto politically costly, but Polis has not publicly committed either direction.

HB 1263 is one of four AI bills Colorado lawmakers sent to Polis before adjourning May 13, alongside HB 1210 (dynamic-pricing restrictions on intimate personal data), HB 1195 (AI use in psychotherapy services), and HB 1139 (AI in healthcare applications). The bundled package — and the chatbot-specific bill's late-session passage — reflects state-level momentum that has now produced enacted or pending AI-companion laws in Oregon, Washington, Georgia (signed May 11 by Gov. Kemp), Idaho, and Connecticut, with California suspense votes still pending on AB 1988 (the "Preventing AI User Self Endangerment Act") and SB 867 (prohibiting companion chatbots in toys).

Sources

Update — 2026-05-17

Initial entry — story first created.