Preheat oven to 350 degrees. Line two 12 cup muffin tins with paper liners; set aside.
WATERMELON CUPCAKES: In a large bowl, combine cake mix and Jell-O. Add milk and melted butter; using an electric hand mixer, beat on medium speed.
Add eggs one at a time, beating well after each addition. Add watermelon puree and beat until combined. Add red food coloring a little at a time, until you reach desired color. Fold in chocolate chips until evenly distributed.
Using an ice cream scoop, fill liners 2/3 full and bake according to box directions for cupcakes about 14-18 minutes. If a toothpick inserted into the middle of a cupcake comes out clean they’re done. Transfer to a wire rack to cool completely.
WATERMELON BUTTERCREAM FROSTING: In a large bowl, beat softened butter and watermelon Kool-aid, until light and fluffy.
Gradually add confectioners’ sugar a cup at a time. Add 1 tablespoon milk after each addition of sugar beginning and ending with sugar.
Add green food coloring a little at a time, until you reach desired color. Transfer to piping bag fitted with a 1M tip and frost each cupcake.