Grown people need to be very respectful and set boundaries with children re touching -- tickling is pleasurable and bonding and also intimate, there is a definite out of control dynamic to it.
Yes it is true "riding games" can involve straddling, but riding games usually end for children around the age of 4 or 5. I don't think a girl sitting on a man's lap need be a red flag but the situation you described was not simply sitting on the lap.
From what you tell of the little girls' neediness and the mom's obtuseness I wouldn't be surpised if she were not already being abused, by this guy. He *says* "I'm gonna tickle you under your shirt?"
RED FLAG RED FLAG-- this is both preparing and slightly threatening her -- the situation is outta control, she is laughing -- he in power, she is not. He does not have the right to touch her body. He isn't asking (which would also be inappropriate). He's *telling*.
I have been around the block and then some re how sex abuse happens, how others ignore it and it can continue til the kid is grown right under everyones noses. Then everyone thinks about all the littel off things and how they shoulda known.
People who haven't ever experienced it or been close to a situation where it happened, may think this type behavior is fine, but no it *isn't*.
.Grooming, boundaries crossed, inattentive parent, needy children, adult with
easy access and opportune moments galore with children -- it's all there.
Tiickling is frequently grooming --a way to get
the child comfortable with being touched by you, seeing how far you can go and where, the child's limits (tickling can start to hurt) -- enjoying a bonding moment with the child -- but the child is vulnerable and I am sorry
but alot of sex abuse starts with tickling.
Please follow your gut for this child's sake. The mom may not ever have really thought about certain things, maybe b/c she is too stressed or has her own unaddressed baggage etc., or is simply selfish and doesn't want to lose free babysitters, but please talk to her and see if any of it strikes a chord with her, a chord either of emotion, or reason.
Most men don't want to be seen as in any way inappropriate with a child, and they would have no problem being playful with a little girl in a nurturing, playful way that does not involve the 7/8 yr old kid straddling him and him tickling her under her shirt. That just wouldn't happen with a safe man. The fact he is acting this way in public may just show he can't help himself (NOT that he is a "safe/innocent" guy.) And/or he is used to acting this way when he gets a chance with kids, due to his wife's complete acceptance and peoples reluctance to address things for many reasons (it's not easy to address something like this when you live there, don't know the guy well, it's not your kid, etc., and others probably would feel the same way).
I'm not saying for sure he is abusing her but the situation absolutely merits close monitoring.
It also doesn't matter if she asked him, "tickle me", whatever, he is the adult. Most decent grown men would be like, no, and redirect the activity/discussion, and continue interacting with the child but with boundaries established.