The home side scored a competitive 285 for eight in their innings thanks largely to a stunning knock of 109 from 117 balls from opener Aaron Finch.
Adam Voges also chipped in with 81 as the pair formed a third-wicket stand of 177, while Toby Roland-Jones took three for 58 as the pick of the visiting bowlers.
England gave it their best during the run chase and a 41 from Warwickshire opener Varun Chopra helped keep the scoreboard ticking over at first.
Yorkshire batsman Ballance was also going along nicely, passing his half-century, but when he retired hurt it signalled the beginning of the end for the Lions.
Despite Roland-Jones blasting 24, they lost their last four wickets for just 18 runs to be skittled out for 240.
It was the fourth heavy defeat in succession for the Lions, with just one more match to come on Friday.
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