The best gay and lesbian athletes in the world already do compete in the Olympics (with a large majority of them in the closet). But the Olympics, and mainstream sport in general, remain a very difficult place for homosexual athletes to compete, and certainly to compete without hiding their sexual identity. There are countless potential champions who under-perform, or simply don’t participate, in mainstream sport because of homophobia.
Another misconception is that the goal of the Gay Games is to find the best gay and lesbian athletes in the world. As said above, those athletes are competing in elite mainstream sport. The Gay Games do not aim at identifying the best gay athletes, but simply at recognizing the best athletes of all sexual orientation who compete at the Gay Games, a sporting event open to all.
The Olympic Games concern only a tiny fraction of athletes in the world. The Gay Games are about allowing everyone, whatever their level, participate in a major international competition.