As a baker, I only bake a certain type of cake: a cake for heterosexual weddings. I don't offer any other services. Which is really no different than a Jewish bakery opening up that only offers to bake cakes for bar mitzvahs.
A Jehovah's witness bakery opens up and they only celebrate successful medical procedures that didn't include blood transfusions.
A scientology bakery opens up that only sells cakes to crazy people.
How do you draw the line between niche product and discrimination?
As a business owner you can make and sell whatever you like. When you decide who can and cannot purchase the product based upon religion, race, sexual orientation, etc. you are discriminating. After you sell me the product, it is mine to do with as I wish. I can throw your cake on the ground, give it to someone else, eat the whole cake myself, or use it at a gay wedding. The cake is no longer yours. I have purchased it, and it is mine to do with as i wish.
Should you decide to refuse to sell me the cake because I'm black, gay, Muslim, or Catholic, you are discriminating.
This same battle was fought in the 1960's concerning the right of a black or Native American person to be served in a bar or restaurant. "No Blacks Allowed" and "No Indians Allowed" signs were prevalent. Such discrimination was wrong then, and it is wrong now. The only difference is the sign has changed to "No Gays Allowed".
Our conservative friends like to say this is our country love it or leave it. Our country was founded on the principle that all men are created equal. Blacks, Irish, Native Americans, Latinos, Catholics, Muslims, women, and now gays have had to struggle to be included amongst "all men". We are headed in the right direction. We have no national religion, and that is as it should be. If Christian fanatics are not satisfied with a country that opens its heart and its arms to all, perhaps it is time for them to leave the country. My own Catholic education encouraged me to "treat my brother as I would have him treat me." That philosophy has served me very well over the course of my lifetime.