In a small saucepan, bring sugar, water, and orange
zest to a boil over high. Reduce to a simmer and cook until sugar dissolves, 3 minutes. Let syrup cool
in a bowl. In a blender, puree watermelon cubes until
smooth. Strain through a fine-mesh sieve, pressing on solids, into a pitcher (you should have about 1 cup juice). Stir in syrup, lime juice, and tequila. Fill salt-rimmed glasses with ice, then pour margarita mixture over top. Garnish with lime wedges.