Is it dodgeball or dodge ball? I am not sure, but I do know that when a guest gets hit with a water balloon it will be fun either way!
Play close attention to the size of your playing area. You can adjust the size based on your number of players but it is best to err on the side of smaller since you do not want it to be so large that the players feel safe if they run to the back corner.
The Set Up: Mark off a rectangular area outside which will be the inbounds playing area for the game. Mark a center line across your rectangular playing area(the short distance center, not the long). Make two large baskets(barrels, trash cans) with an equal number of water balloons and place them on the back line of either side of the playing area. Divide the players into two evenly matched teams.
The Rules: Each team gets water balloons from the basket on their side and attempts to hit members of the opposing team with the water balloons without crossing the center line. If a players is hit with a water balloon without it hitting the ground first, crosses the center line or leaves the inbounds area they are out of the game. Also, if a participant catches a water balloon thrown by the opposing team without it hitting the ground or breaking the party guest that threw the balloon is out. Continue playing until one team wins by eliminating all players from the other team. If both teams run completely out of water balloons with players left the team with the most players remaining is the winner.
Clear the Field of Play: As is the case with any active outdoor game, make sure the playing area is clear of anything the party guests might twist an ankle on or trip over.