Idk why op feels the need to care really, unless your sister drives or something of the sort it's not really a problem
She's not an adult. She doesn't get to make her own decisions. Her parents are responsible for her, and she should not be drinking without them knowing. If Damp's parents decide she can drink within the house and when it's monitored, then fine, they can make that decision. She can't.
Furthermore, she's stealing from her family. That's reason enough to tell on your sibling. Good parenting is teaching your child that it is wrong to steal or to condone stealing.
Damp is in the right to tell his parents that his sister has stolen alcohol.
He can mention her blackmailing him too, if he wants.