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Read the article here: http://www.advocate.com/exclusive_detail_ektid75481.asp
Money quote: Stephen Toulouse, program manager for policy and enforcement on Xbox Live, told me, “We have heard clearly that customers want the ability to self-identify [and] it's our job to provide this in a way that cannot be misused.”
Unfortunately, Toulouse wouldn't say how or when Microsoft will provide that ability to LGBT gamers, but acknowledging a problem is the first step to solving it, right?