My understanding is that businesses cannot deny service based on protected class. E.g. Reddit couldn't put "Catholics are barred from using Reddit" in their TOS

My understanding is that businesses cannot deny service based on protected class. E.g. Reddit couldn't put "Catholics are barred from using Reddit" in their TOS. But subreddit bans are done by users of Reddit, not by Reddit itself. If someone on Xbox Live mutes the chat of Catholics and kicks them from the lobbies they're hosting, you can't go complain to Microsoft because these are the actions of a user not the company.