I don’t know what you have there, but it looks similar to my 1937 Johnson – LS. If it is the same type, the seal is cork. Sheets of cork gasket material are available if you should like to try and make a replacement. I made a leather seal to lay over the cork. The hole is undersized so it would fit tight on the prop shaft. I ran the motor several times a day for a week this summer. Easily more than 15 hours. Zero water in the gear case.
A "Boathouse Repair" is one thats done without having tools or the skills to do it properly.