Ruby Fundamentals - Non-core problem: hangman game

hangman.rb

#!/usr/bin/env ruby

# DEFINITIONS

def replace_letters(word, letters)
  string = "[^" + letters.join + "]"
  regex = Regexp.new(string)
  new_word = word.gsub(regex, '_')
end

# VARIABLES

word_bank = ["commit", "terminal", "repo", "developer", "ruby", "fake word", "fake word_2"]
hidden_word = word_bank.sample
while hidden_word.match(/[^a-z]/)
  hidden_word = word_bank.sample
end
displayed_word = '_' * hidden_word.length
chances = 8
guesses = []

# PROGRAM

puts "Welcome to Hangman!"
puts
while chances >= 1
  puts "Word: #{displayed_word}"
  puts "Chances: #{chances}"
  print "Guess a single letter (a-z) or the entire word: "
  guess = gets.chomp

  if guesses.include?(guess)
    puts "You already guessed that letter!  Guess again.\n\n"
  else

  # If guess is a letter:

    if guess.length == 1
      guesses << guess
      if hidden_word.include?(guess)
        displayed_word = replace_letters(hidden_word, guesses)
        puts "Found #{hidden_word.count(guess)} occurence(s) of the character #{guess}.\n\n"
        if displayed_word == hidden_word
          puts "Congratulations, you've guessed the word!"
          exit
        end
      else
        puts "Sorry, no #{guess}'s found.\n\n"
        chances -= 1
        if chances == 0
          puts "You're out of chances, better luck next time..."
          exit
        end

      end

  # If guess is a word:

    elsif guess.length >= 1
      if guess == hidden_word
        puts "Congratulations, you've guessed the word!"
        exit
      else
        puts "Sorry, that's not the right word.  You lose!"
        exit
      end
    else
      puts "You must enter a valid character a-z."
    end

  end
end