Fun Size Knock Out is perfect for kids and adults of all ages. I've found that 2nd graders and older are better at knocking and remembering all the rules. For younger children, I suggest starting out with No Out Knock Out first.
What is Fun Size Knock Out
I have a "fun-size" "gym" (about the size of a classroom), with 8 foot ceilings. I had to get creative to make Knock Out work. Turns out, this solution is perfect for playing at home (inside or outside). You don't even need basketball goals. I started the game using 10-gallon water coolers. The best option at home is to use a plastic storage bin or laundry basket (pro tip: weigh it down with something. I put dumbbells in mine at home). A clean trash can would also make a nice basketball goal.
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You need 2 basketballs and a small "goal." Then make a box or circle around it with painters tape (or chalk or nylon webbing). The perimeter should be at least 2 feet away from the goal. I call this The Box. Then make a Free Throw Line. Optional, make a Lane from the box to the Free Throw line.
Paid links to my setup equipment.
For an even smaller game, you can wad up paper for balls and shoot into a smaller "goal" (like a small box or clean trash can).
Fun Size Knock Out Rules
If you know the rules of Knock Out (rules below), it's the same except you cannot shoot from inside The Box or The Lane (if you choose to use it. It's a good way to keep players out of the way of the next shooter). The official rule is that your feet and shoulders cannot be in The Box or The Lane. If they're inside those areas and they make the shot, it doesn't count and they'll need to shoot again.
Knock Out Rules
Imagine a race around a track where players line up at the starting line. Player 1 starts running around the track Then Player 2 takes off after them, trying to catch them. When Player 1 gets back to the starting line, Player 3 can go, trying to catch Player 2. If Player 3 passes Player 2, then Player 2 is out. The game continues until only one player remains.
Knockout is like this, except instead of running around a track, they're shooting baskets. The starting line is the free throw line. Player 1 shoots from the free throw line, then shoots from anywhere until they make it (then they pass to next player and go to the end of the line). As soon as Player 1 takes their first shot, Player 2 tries to catch up and make the basket as quickly as possible. If they pass the player in front of them, that player is out. If not, they keep shooting until they make it or the person behind them makes it and gets them out.
Players cannot interfere with the other player's ball. However when you shoot, your ball can knock out the other person's ball, saving yourself and making their job harder. Any interference results in being eliminated from the game.