The deal breaker for me would be that they are defying you and hiding it, which is a version of lying. I would say to them that they are engaging in immature responses to rules and parental authority, and therefore have proven themselves untrustworthy with an expensive piece of equipment. If you allow this level of arguing, you will never get control when the 11 year old hits 13 and 14 and really starts pushing your buttons. I totally get that you need some "me time" and it's so tempting to grab whatever is available.
You have to stop the fighting. Read the responses below - JB's practice of changing the password is excellent. The mindset that will help you is that they are not "entitled" to electronics, passwords, or even "educational games." It can also be provided when laundry is done/folded/put away, the dishes are in the dishwasher, and the groceries are put away. Both kids are capable of doing these chores.
Also, re-think (and read up on) the value of boredom in kids. It's something we avoid as if it makes us bad parents, like they have to be occupied all the time. But that down time with nothing scheduled is a beneficial thing, good for creativity, and calm-inducing after they quit fussing about it. They can, and should, learn to entertain themselves. They can also learn to knock on a friend's door, practice being polite to the friend's parents, and find things to do together. Invest in simple things like a deck of cards, a few real board games that kids of different ages can play together (or with you - family game nights are awesome!) and a standard book like Hoyle's Rules of Games.