Either.... industrial strength lungs... the use of stem cells for genetic modification... they have secret gills... or in the future mankind just learns to adapt underwater.
Yeah... I don't know either, it seems pretty far fetched but it makes for a good game no? Or perhaps the water they play in for Blitzball is specially adapted. Uh wait. No. Because they go in the Ocean too xD.
I'm sure there is an answer... but then we could ask ourselves how does Lulu keep her dress up.