Actually, they pay these guys for their time which is legal in the States. We can assume that the daddies add a little extra to the tip if things get wild, but it's a gray area that basically legalizes prostitution. Very similar to restaurants that classify their servers as "models who serve" to get around the employment discrimination laws.
Paying for his time is a legal workaround for anti-prostitution laws. How well it would hold up in court when the judge finds out that Dylan assumes the position every time he meets the guys, is up in the air, but it's technically legal. They can also call them a consultant

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