Definition
In the US, allegedly a euphemism for sexual party games (though largely a media myth). In the UK, it's an innocent '90s nostalgia party with Rainbow characters, jelly, and ice cream. Definitely depends which side of the Atlantic you're on.
Example Usage
The American version of a rainbow party sounds emotionally devastating, but the UK version with Zippy and Bungle sounds actually fun.
Source: Urban Dictionary (https://www.urbandictionary.com/define.php?term=rainbow%20party&defid=1320942)
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See “rainbow party” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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