Step 1: Preheat the oven: Preheat oven to 350 degrees F (175 degrees C). Coat three 8-inch round cake pans with baking spray and set aside.
Step 2: Mix dry ingredients: Whisk together 2 ½ cups flour, watermelon gelatin, baking powder, salt, and baking soda in a medium bowl.
Step 3: Cream butter and sugar: Beat butter at medium speed until creamy, about 3 minutes. Gradually add sugar and beat until fluffy.
Step 4: Add eggs: Add eggs one at a time, mixing after each addition and scraping the bowl as needed.
Step 5: Combine wet and dry ingredients: Add flour mixture alternately with buttermilk, beginning and ending with flour mixture. Mix on low speed until just combined.
Step 6: Add color and chocolate chips: Stir in vanilla and red food coloring. Toss chocolate chips with remaining tablespoon flour and gently fold into batter.
Step 7: Divide batter: Evenly divide batter among prepared cake pans.
Step 8: Bake the cakes: Bake for 28 to 32 minutes or until a toothpick inserted in the center comes out clean.
Step 9: Cool completely: Let cakes cool in pans for 10 minutes, then transfer to a wire rack to cool fully.
Step 10: Make frosting: Beat butter and salt until creamy. Add vanilla. Gradually add powdered sugar and cream until smooth and fluffy.
Step 11: Color frosting: Separate frosting into bowls. Tint one red, one green, and leave a small amount plain white.
Step 12: Assemble the cake: Place one cake layer on a serving plate. Spread red frosting on top. Repeat with remaining layers.
Step 13: Frost the outside: Cover the sides with green frosting. Pipe plain frosting around the top edge.
Step 14: Decorate: Sprinkle miniature chocolate chips on top to look like watermelon seeds.
