Water Balloon Dodge Ball
Divide the players into two teams and mark off a play area. Mark a line down the middle of the play area and have the teams get on opposite sides. Place a large bucket filled with water balloons on each team's side. When you say, "Go," the players grab water balloons and throw them at the opposing team. If a water balloon hits you, you are out of the game. The last player standing wins the game.
Water Tug O' War
Place a sprinkler in the middle of the play area and have it spraying straight up. Divide the players into two teams and have each team stand on opposite sides of the sprinkler. Take a large rope and give it to the players. Tell the players they will play the game the same as tug o'war. The teams try to pull each other in the water of the sprinkler. The team that pulls the other team into the water wins the game.
Water Volleyball
Play water volleyball at your next picnic using two sheets, a volleyball net and several water balloons. Each team has four players, and each team gets a sheet. The teammates will hold the sheet by all four corners. Teams must catch and serve the ball over the net using only the sheet. If a balloon pops on your side of the net, the other team earns the point. A variation to this game is to use beach towels instead of sheets and have two players per beach towel.
Sponge Tag
Rope off a designated play area so players know where they can run. Put a large bucket of water in the middle of the play area and select one player to be "it." Place a large, soft sponge in the bucket of water. When you say, "Go," players have 15 seconds to run before "it" comes after them. "It" will try to tag a player using the sponge. If a sponge hits a player, he becomes "it" for the next game.