Police spokesperson Emilian Kayima said marine police have so far rescued 40 people who were on board.
The boat, on a routine pleasure cruise and full of mostly youthful revellers, sank at about 7pm on Saturday.
He said that rescue services were slow to respond.
One Facebook Live user said the boat's operator had detected a leak and pleaded with passengers to sit on one side to balance the vessel some 10 minutes before it capsized. Witnesses said they heard people calling for help as they tried to stay afloat and others tried to swim ashore.
A woman sheds tears at the rescue site of the capsized cruise boat on lake Victoria.
"Fishermen on two small boats could see that the boat was sinking and went to help".
Richard Kikongo, a local official, described the distinctive boat -- which sported shark-style teeth painted on the bow -- as "not in good condition".
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More than 200 people were killed in a Tanzanian ferry disaster in September, with officials saying it had been dangerously overcrowded.
The rescue boat arrived on time and all the survivors went onboard but they boarded in big numbers and it also capsized and that's when majority drowned and died.
Matovo said some of the rescuers also drowned as a result.
Lt. Col. Deo Akiiki, Uganda's deputy military spokesperson said in a statement that Uganda People's Defense Forces (UPDF) marines are entering deep waters on Sunday morning to join the search for survivors and retrieving the dead bodies.
East Africa's major lakes have been the scene of multiple boat accidents in recent years.
She narrated that they tried to cling on the boat as they screamed but majority were already drunk and had taken off their life jackets.
In 1966, more than 800 people lost their lives on Lake Victoria when the MV Bukoba sank off the mainland town of Mwanza, according to the Red Cross.