It is either going to be your pivot pin or your gimble ring. The pin could be loose. It would have to be real loose to show that much slop. If you have a merc manual it shows your how to tighten/remove this pin. There are two ways that this can be accomplished.
1-throught the engine compartment, which means that you need to pull the motor. There should be a small notch right above the transom assy. You can feel in there and feel a nutt. That is the nutt that holds the pivot pin on.
2-your can drill a hole on the backside of your transom assy that allows access to this nutt. You might want to look and see if there is a hole already there. They even make bushings for this that cover the hole when complete.
The piviot pins aren't cheap.
But my guess would be that you could use a new pin or gimble ring.