Drain water off of water chestnuts. Slice the raw bacon strips in half. Wrap each 1/2 bacon strip around a water chestnut and secure with a toothpick. Repeat for all the bacon and water chestnuts. Place them in a baking dish sprayed with Pam.
In a small bowl, mix the brown sugar and the ketchup using a spoon. Pour the ketchup/brown sugar mixture evenly over all of the wraps. Bake at 375 degrees for 45 minutes. Serve hot.