This guy has it EXACTLY right.Johnny Impact said:There isn't going to be any victory for you here. If you stay out, you'll feel guilty for doing nothing. If you try to talk to your sister, you'll get a shitstorm of "don't tell me how to raise my kid." If you call CPS, you'll feel like a coward for dumping the problem on someone else. If you broach the subject with your niece, she'll probably get angry and tell you it's none of your business.
Abuse means everyone loses. Resign yourself to feeling bad in some way. Then decide what you would like to feel bad for doing.
If you care about your niece there should be no way you just stay out of this.
Pick which thing you'd feel the least guilty for doing and do that.
If I had a sister and this was remotely in character for her I'd chew her the hell out all fire and brimstone style.