I am (was) a ship's engineer for lots of years and I can tell you exactly what happened and why.
There were numerous tragedies on ferries and other overloaded watercraft in some less developed countries. This started an treaty group called SOLAS (Safety of Life At Sea) to increase the scope of crafts covered by the agreed regulations. Only a few of the regulations were actually changed, but the vessels covered now included lakes, harbors and near-shore waters.
It is my contention that a clear thinking operator could do this and still make money. It would require more investment and some serious crew training, but I believe that it could be done at a reasonable price.
Matt