Look at this article on Kotaku about what hate-speak on the internet! http://kotaku.com/5093970/vexed-by-online-bigots-language-psychologists-say-they-want-you-to-be?skyline=true&s=i
The advice is to ignore it. It’s a tactic used to gain a competitive advantage. Or if you must speak up, which’ll only work in a one-on-one situation, say something like “what if I told you I were black?” That’s what the article says. I think reactions vary.
The only time in the last few months or so that I’ve actually spoken up was in real life, playing a WoW TCG game, because my opponent said “that’s gaysauce.” I said “my best friend’s gaysauce!” and he said “that doesn’t make any sense. How is he a sauce?” and I told him that it was easy: I ground him up and put him on pasta. He tried to continue the conversation with more surrealism and we dropped it. It didn’t get through to him, though, cuz he still says things are gay in my presence. 5th grade gay 1, Judy 0. I know someone who calls things gay cuz she likes pressing peoples’ buttons and playing mind games. It irks me even though I know it’s supposed to be ironic, and that I’m supposed to be the stupid one here because I’m stuck on being “PC” and that’s stupid.
A few years ago I wrote a long impassioned post on my guild’s private forums begging them to stop calling people they didn’t like “fags” and I got 1 person to stop! I remember once we were waiting around to get loot distributed after that one guy near the end of Molten Core with all the healer friends… you know… the guy that drops vendorstrike… Sulfuron!!! Anyway he said something was gay and then sent me a tell saying sorry.