Yes, blackmail could happen. I wonder how many of these sugar daddies are men with wives at home, for instance? Or prominent men in their communities, who would like to keep everything secret????
There’s a girl on YT who details her time in the sugar daddy profession. She says often the hookups were at the guy’s house and the wife and kids were on vacation, he’d tell the neighbors she was a “cleaning lady”.
There are no secrets in that game. It’s just a matter of how long you can afford the silence.