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This myth actually stems off of the previous misconception that Paganism is entirely Goddess and feminine oriented. Since many Wiccans put a heavy focus on the Goddess, and Dianic Wicca became openly popular for a time, it became an assumption that all Pagans had to be lesbians or gay.
To explain: Wicca is a type of Paganism. Dianic Wicca is an offshoot of Wicca. Dianic Wicca is a completely Goddess centered belief system practiced almost exclusively by women. In the 70s and 80s a very substantial number of Dianics were lesbians, so anyone who followed this path was immediately assumed to be a lesbian. Even among non-Dianic Wiccans, there was a time that the Goddess focused nature made people think that any man following it had to be gay. (There was also a short-lived “Faerie Wicca” movement comprised solely of gay men.) So, that’s where it all got started.
The truth is simple: Pagans come in every sexual orientation. You’ll find Pagans who are heterosexual, homosexual, bisexual, omnisexual, and even asexual. We are not of any one kind. Most Pagan traditions are accepting of people regardless of their orientation, since it’s not something that really matters as part of the religion itself.
There are, as I mentioned, some traditions that do cater largely or even exclusively to individuals of a particular orientation. This is, however, fairly rare. Pagans are generally a very inclusive bunch, and what one does in their bedroom isn’t something that’s anyone’s business but their own.