In a small saucepan, bring sugar and water to a boil. Cook and stir until sugar is dissolved; set aside to cool.
In batches, process the watermelon in a food processor for 2-3 minutes or until smooth. Transfer puree to a large bowl; stir in the lemon juice, vodka and sugar syrup. Pour into a 13-in. x 9-in. dish. Freeze for 1 hour or until edges begin to firm; stir. Freeze 2 hours longer or until firm.
Process watermelon mixture in batches for 2-3 minutes or until smooth. Serve immediately or transfer to freezer containers and freeze until serving.