In Ultima VII: Black Gate, the player encounters a bath house in Buccaneer’s Den. In this bath house the player can pay for the services of male and female sex workers, regardless of their avatar’s gender.

Baths in Ultima VII Image credit http://wiki.ultimacodex.com/wiki/The_Baths

LGBTQ  references in this game series: 

Ultima VI: The False Prophet (1990): “Bad” Gypsies

Ultima VII: The Black Gate (1992): Baths at Buccaneer’s Den

Ultima VII: Serpent Isle (1993): Fridigazzi

Ultima V: Lazarus (2005): Possible gay encounter

Citations:

1. Adam and Steve, dragon slayers. (March 14, 2011). Retrieved from http://queerious.com/2011/03/14/adam-and-steve-dragon-slayers/#more-2055
2. Big Gay WooHoo: Same-Sex Moments In Video Games. (October 23, 2010). Retrieved from http://geeksdreamgirl.com/2010/10/23/big-gay-woohoo-same-sex-moments-in-video-games
3. Buccaneer’s Den. (n.d.). Retrieved from http://ultima.wikia.com/wiki/Buccaneer’s_Den
4. Gay option. (n.d.). Retrieved from http://tvtropes.org/pmwiki/pmwiki.php/Main/GayOption
5. LGBT themes in video games. (n.d.). Retrieved from http://en.wikipedia.org/wiki/LGBT_themes_in_video_games
6. The Baths. (n.d.). Retrieved from http://wiki.ultimacodex.com/wiki/The_Baths
7. Ultima VII. (n.d.). Retrieved from http://tvtropes.org/pmwiki/pmwiki.php/VideoGame/UltimaVII