A contract lesbian is a celebrity, such as a musician or actress, who must act and date as if she is a lesbian for publicity. They are also usually not allowed to date men until their contract is up, to keep it from being found out that they're not really lesbian.
Lydia: Each girl in T.A.T.U. is a contract lesbian.
Brandon: What the hell is a contract lesbian?
Lydia: You know, they acted like lesbians 'cause it said they had to in their contract, just so "All The Things She Said" would get airplay.
Tony: So they're not really lesbians, but rather they just get paid to act like they are in public?