I think the comment was intended to be overtly racist. LGBT folk are pretty welcome in Israel, but you "should be" sleeping with Israelis and not "Arabs".
They are if they're Israeli (and white). People of Palestinian descent living in Israel (as well as Jewish Arabs who are not Palestinian, to a lesser extent) have a very different experience with being gay in Israel.
They are if they're Israeli (and white). People of Palestinian descent living in Israel (as well as Jewish Arabs who are not Palestinian, to a lesser extent) have a very different experience with being gay in Israel.