Most massively multiplayer game servers employ static partitioning of their game world into distinct mini-worlds which limits cross-server interactions between players. We have designed and implemented an architecture in which the partitioning into regions is transparent to players and interactions are not limited to objects and players in a single region or server. This allows a finer grain partitioning, which combined with a dynamic load management algorithm allow us to better handle transient crowding. Our load balancing algorithm is aware of the spatial locality in the virtual game world. It balances the load and reduces the cross-server communication, while avoiding frequent reassignment of regions. Our results show that locality aware load balancing reduces the average user response time by up to a factor of 4 compared to global algorithms that do not consider spatial locality and by up to a factor of 6 compared to static partitioning.