Girl embracing star in gambling town (3,5)
I believe the answer is:
las vegas
'gambling town' is the definition.
'girl embracing star in' is the wordplay.
'girl embracing' becomes 'lass' (I can't explain this - if you can you should give a lot more credence to this answer).
'star' becomes 'vega' (Vega is an example).
'in' is an insertion indicator.
'lass' enclosing 'vega' is 'LAS VEGAS'.
(Other definitions for las vegas that I've seen before include "city surrounded by desert" , "entertainment centre" , "Gambling city in Nevada, USA" , "Nevada's largest city" , "Sin City, USA" .)