I think living outside the US for over 10 years has made me much more open. Of course, I was very open in the beginning. After coming out at 18 by accident, I've learned that the more game playing, the worse the consequences. No one ever wants to make the first move... so don't make any moves. Make equally playful comments and engage him in the game he's playing, but one up him. To "you look manly tonight" you could reply, "probably because I'm a horny man like you". This will likely reduce the sexual tension in the room, which is clearly present between you and he.
Comics come out onto stage and say what we're all thinking, so we all laugh. That's because no one dares say what they're thinking outside of making it a "joke" so they can back out if it goes wrong. George Carlin made a career out of simply speaking his mind about government and many other situations, where in fact he was only making true statements based on his analysis of life. If you engage someone on their turf they can't be butt hurt by it. Just stay light with all of it and avoid any soap opera drama, especially in your own head.
Things would go much better for everyone if we could only venture being honest without being heavy about it. The easiest way for me to let someone know I'm gay is an ultra-casual and comfortable, matter-of-fact reference. People can't redress the truth when it is spoken without decoration or drama.
"I'd like to meet your wife, do you have kids?"
To introduce you to her, I'd have to change sexuality, so no, no kids. You?
Easy.